The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization
Main Report
FINAL REVIEW DRAFT
AUTHORS Anthony H. Cordesman and Abdullah Toukan
March 22, 2017
Please address comments and suggestions to [email protected] and [email protected]
Photo credit: FAYEZ NURELDINE/AFP/Getty Images
Cordesman/Toukan MENA National Security Economics 22.3.17 ii
The National Security Economics of the Middle East: Comparative Spending, Burden Sharing, and Modernization
Final Review Draft
Anthony H. Cordesman and Abdullah Toukan March 20, 2017
Please address comments and suggestions to [email protected] and [email protected]
Cordesman/Toukan MENA National Security Economics 22.3.17 iii
The economics of national security in the Middle East and North Africa (MENA) region have changed dramatically since 2001. Counterterrorism, counterinsurgency, and internal security have emerged as having the same priority as military forces, and the rise of non- state actors, the use of proxies, and the increase use of asymmetric warfare have changed the nature of warfighting as well. Nuclear and missile threats are not new to the region, but they are a rising threat, and one that affects the cost and shape of many of the region’s military forces. Internal security has also increased in priority and in cost. The 9/11 attacks made it clear that violent Islamist extremism posed a major threat inside and outside the region, a threat reinforced by the al Qaeda attacks in side Saudi Arabia in 2011, and by the emerge of ISIS and its claims of creating a “Caliphate” in Syria and Iraq in 2011. At the same time, the major political upheavals that began in 2011 have shown that national security faces a critical threat to internal stability growing out of failures to provide effective governance and development, and that regional states need to pay far more attention to the needs of their peoples, to the impact of massive population growth, to the need to create jobs and higher levels of income, and to dealing with social change. The end result is that the economics of national security now go far beyond spending on military forces. They have three critical elements: • Military security: The economics of creating military forces that can defend and deter given nations, where the size of spending is secondary to the effectiveness and the efficiency with which military budgets are spent. • Internal security: The economics of dealing with terrorism and challenges like violent Islamic extremism, ethnic and sectarian differences, tribal and regional tensions, and the rise of armed or violent non-state actors—including forces like Hezbollah. • Internal stability: The economics of providing the levels of governance, employment, services and infrastructure, education, medical services, and the other key elements of internal stability necessary to avoid mass uprisings, and trigger popular support for internal security threats. This analysis explores the resulting trends in regional and national security spending in the Middle East and North Africa (MENA) region using a variety of sources and metrics. It highlights trends within the region and by country, examines leading national efforts, and raises key issues regarding burden sharing. The analysis shows that virtually all of the countries in the region face serious problems in coping with the costs of ongoing conflicts and improving internal stability that place serious burdens on their economies. It also shows that while some regional players—like NATO Europe—may be spending too little, but that many MENA nations—including some of its wealthiest petroleum exporting states—may well be spending more than their economies can sustain. The arms race in the Gulf region is particularly expensive, and has pushed several Gulf States to extraordinary spending levels as a percent of their GDP. By some estimates, it Cordesman/Toukan MENA National Security Economics 22.3.17 iv has made Saudi Arabia increase its national security spending to levels that rank third or fourth in the world. Virtually all regional states that are not actively at war are still spending far more their GDP on military forces than the 2.0% goal set by NATO, and many pay several times that percentage. National security economics have become a critical issue for regional governments that must now pay for steadily more expensive military forces, internal security forces, and efforts to improve internal security. At the same time, this analysis warns against taking any given source of data as reliable, and focusing on a single metric like the percentage of GDP being spent on defense to estimate the national level of effort or "burden." The data given countries report on military expenditures vary sharply in reliability and inclusiveness, no one metric explains levels of effort or their effectiveness, and spending may or may not produce effective forces tailored to real world national and regional security requirements. This raises critical issues about efforts to assess the economics of "burden sharing," particularly when they use essentially meaningless and misleading metrics like military spending as a percent of GDP. The key issues at both a national and alliance level are what levels of spending buy effective forces, deterrence, and warfighting capabilities. A given percentage of GDP says nothing about the effectiveness of given levels of military spending, of the ability of a country to fund them and meet its other security needs, or how alliances and collective security efforts should best be structured to meet national and common needs. It also makes no distinction between the major regional powers—like Egypt, Jordan, Saudi Arabia, the UAE, and potentially Iraq—that must underpin any major Arab collective security effort and the smaller and often poorer states that cannot match them in economies of scale and purchasing power; the role that small but exceptionally rich states like Qatar should play; or the ways regional and outside powers like the United States, Britain, and France can best use their resources to achieve synergistic and effective results. The analysis also warns against focusing on military spending to the exclusion of national police, counterterrorism, and other internal expenditure data, which are lacking as a separate set of data for most MENA countries. In many cases, military expenditures are combined to some undefined degree with internal security spending. In others, reporting only cover military and paramilitary forces. There are insufficient data to report—and analyze—on this critical aspect of MENA national security spending. Most previous reporting and assessment of national security spending also ignores the extent to which spending on national stability has become a key issue since the political upheavals and new cycle of conflicts that began in 2011. It is all too clear that internal stability is the key prerequisite for effective military and counterterrorism efforts, although there is no clear way to estimate the cost and comparative size of such efforts. Accordingly, the analysis includes three separate Annexes that cover every MENA state, that highlight what is known about some of the key metrics shaping internal stability, and that can be compared with the size and burden of military and other national security spending. Cordesman/Toukan MENA National Security Economics 22.3.17 v
TABLE OF CONTENTS ESTIMATING)THE)SIZE)OF)MIDDLE)EAST)AND)NORTH)AFRICA)(MENA))MILITARY)AND) SECURITY)BUDGETS)...... )1! NEW!DIMENSIONS!IN!NATIONAL!SECURITY!SPENDING!...... !1! Figure!One:!A!Key!Uncertainty!in!National!security!Economics:!The!Rising!Number!of!Terrorist! Incidents!Importance!of!Internal!Security!Expenditures!in!the!MENA!Region:!...... !2! REPORTING!ON!DIRECT!DEFENSE,!MILITARY,!AND!NATIONAL!SECURITY!SPENDING!...... !4! LOOKING)AT)THE)BROAD)TRENDS)IN)MILITARY)SPENDING)AND)NATIONAL)SECURITY) EFFORTS)...... )5! TOTAL!REGIONAL!SPENDING!...... !5! COMPARING!SPENDING!BETWEEN!GLOBAL!REGIONS!...... !5! TOP!RANKING!MENA!SPENDERS!...... !6! TRENDS)IN)MILITARY)SPENDING)BY)NATION)AND)SUBREGION)...... )6! NORTH!AFRICA!...... !6! EGYPT!AND!THE!LEVANT!...... !8! THE!GULF!AND!YEMEN!...... !10! GCC!VERSUS!IRANIAN!MILITARY!SPENDING!...... !14! RANKING!STATES!BY!SPENDING!AS!A!PERCENT!OF!GDP!...... !14! SNAPSHOTS!OF!CURRENT!MILITARY!SPENDING!VERSUS!LONGER!TERM!TRENDS!...... !16! Figure!Two:!IISS!Estimate!of!Comparative!MENA!Military!and!Security!Budgets!and!Levels!of!Effort!...!17! Figure!Three:!SIPRI!Estimate!of!Comparative!MENA!Military!and!Security!Budgets!and!Levels!of!EffortY! Part!One!...... !18! Figure!Three:!SIPRI!Estimate!of!Comparative!MENA!Military!and!Security!Budgets!and!Levels!of!EffortY! Part!Two!...... !19! Figure!Four:!Iran’s!Military!Spending!Compared!to!the!GCC!States!...... !20! ARMS)IMPORTS)AND)MODERNIZATION)...... )21! THE!CONGRESSIONAL!RESEARCH!SERVICE!(CRS)!ESTIMATE!...... !21! Comparative+Regional+Trends+...... +24! Key+National+Trends+...... +24! North+Africa+...... +24! Egypt+and+the+Levant+...... +25! The+Gulf+and+Yemen+...... +25! Figure!Five:!Value!of!Arms!Transfer!Agreements!with!Near!East,!by!Supplier!...... !27! Figure!Six:!Value!of!Arms!Deliveries!to!the!Near!East,!by!Supplier!...... !28! Figure!Seven:!Number!of!Weapons!Delivered!to!the!Near!East,!by!Supplier!...... !29! THE!SIPRI!ARMS!IMPORT!DATA!...... !30! Figure!Eight:!SIPRI!Data!on!MENA!Arms!Transfers!by!Country!...... !32! IRANIAN!IMPORTS!VERSUS!THOSE!OF!ITS!ARAB!NEIGHBORS!...... !33! Figure!Nine:!Iran’s!Slow!Rate!of!Military!Modernization!Compared!to!the!GCC!States!...... !33! Figure!Ten:!SIPRI!Estimate!of!Imports!by!the!Arab!States!of!the!Gulf!are!much!higher!than!imports!by! Iran!...... !35! THE!U.S.!DEFENSE!SECURITY!COOPERATION!ASSISTANCE!DATA!...... !35! Figure!Eleven:!Arms!Transfer!Agreements!to!the!Near!East!by!Supplier!as!Percent!of!Total!Value!...... !36! THE)REAL)WORLD)DYNAMICS)OF)MENA)SECURITY)AND)STABILITY)...... )36! IT!ISN’T!HOW!MUCH!YOU!SPEND,!IT!IS!HOW!WISELY!YOU!SPEND!AND!WHAT!YOU!BUY!...... !37! TURNING!“BURDEN!SHARING”!INTO!THE!THEATER!OF!THE!ABSURD!...... !37! NATIONAL!STABILITY!IS!AT!LEAST!AS!CRITICAL!AS!MILITARY!SECURITY!AND!COUNTERTERRORISM!..!37! Figure!Twelve:!Mapping!Sectarian!and!Ethnic!Tensions!...... !39! Figure!Thirteen:!Governance!and!Corruption!...... !40! Figure!Fourteen:!Population!Pressure!and!the!"Youth!Bulge"!...... !41! Figure!Fifteen:!Income!Per!Capita!and!Falling!Behind!in!Key!Services!...... !42! Cordesman/Toukan MENA National Security Economics 22.3.17 vi
PUTTING)MENA)NATIONAL)SECURITY)SPENDING)IN)GRAPHIC)PERSPECTIVE)BY) SUBREGION)AND)COUNTRY)...... )43! THE!SUBREGIONAL!AND!NATIONAL!ANNEXES!...... !43! EXAMINING!NATIONAL!STABILITY!IN!DEPTH!...... !43!
Cordesman/Toukan MENA National Security Economics 22.3.17 1
ESTIMATING THE SIZE OF MIDDLE EAST AND NORTH AFRICA (MENA) MILITARY AND SECURITY BUDGETS The Middle East and North Africa (MENA) region has become one of the world’s leading zones of conflict, driven in part by national rivalries, by ethnic and sectarian tensions, and by violent Islamist extremism. National security efforts are steadily rising in cost and expanding their role and focus. In many cases, they must pay for serious civil conflicts, and the threat of such conflicts affects virtually every state in the region. It is important to note, however, that many of the dynamics of regional national security expenditures are unclear. Many countries do not report their national security spending in any detail. Some MENA conflict states like Libya, Syria, and Yemen do not report a meaningful figure. Some with large defense sectors that play a productive role in the civil economy—such as Egypt and Iraq—do not provide meaningful reporting on revenues and seem to under-report the cost of their defense industrial and production efforts, Many countries seem to use separate accounting procedures to report their arms purchase and contrast with overseas states, and seem to be deliberately disguising the full nature of their national security spending. Others - like Saudi Arabia and the UAE -- have very complex patterns of arms imports that make it difficult to understand the cost per year of their arms import and modernization efforts. As a result, it is often necessary to analyze arms imports separate from total national security spending. New Dimensions in National Security Spending Since the early 2000s, important changes have taken place in national security. that had made the full analysis of such costs far more difficult. Terrorism and extremism have presented threats in many MENA countries during much of their existence. Algeria, for example, fought a major internal civil battle against extremism from 1990 to 2000. However, these threats became far more serious throughout the MENA in the early 2000s -- following major acts of terrorism like the 9/11 attacks in the U.S. and by Al Qa'ida in Saudi Arabia beginning in 2003. Most MENA countries do not, however, report openly on the full cost of their counterterrorism programs and they often cannot be separated from normal expenditures on law enforcement. In most cases, it is not possible to accurately estimate either the total cost of intelligence efforts or the portion directly tied to military versus counterterrorism efforts. The importance of this issues is illustrated in Figure One, which shows the trend in total terrorist incidents, and the race between efforts to improve counterterrorism and the rise in incidents. These counts do not reflect a new rise incidents within and coming out of the MENA region in 2016, they do not count acts of violence by states like Syrian barrel bombs, and they generally do not reflect sectarian, ethnic, and tribal violence – all of which challenge the security of the region and internal security forces. Annex A: North Africa, Annex B: Egypt and the Levant, and Annex C: Gulf and Yemen shows these trends in more detail, and highlight the very different patterns of violence by country as well as their rising need for additional security forces and measures. Cordesman/Toukan MENA National Security Economics 22.3.17 2
The UN Arab Human Development Reports warned of another major challenge to national security from 2002 onwards.1 A combination of radical population growth, a resulting "youth bulge" in young men and women entering the labor force, lags and restrictions on economic development and growth, and weak governance and corruption were creating major internal stability problems in many -- if not most MENA states. Most governments failed to respond to these warnings, and the consequences became all too clear in 2011. A series of uprisings began in Tunisia and spread to states like Egypt, Libya, Syria, and Yemen that made spending on civil stability a key aspect of national security spending in every nation in the MENA region. A few states like Saudi Arabia have responded with major long term stability and development plans like the Saudi "2030" effort. Most governments, however, have had to make major new budget expenditures on the civil side of stability -- spending at least as important to national security as military and counterterrorism. There are no reliable data that allow as clear estimate of such efforts -- or the lack of them. they are, however, a critical aspect of real world national security spending and any realistic estimate of "burden sharing." In fact, in broad terms, spending on civil reform and development is more important in the long term in many -- if not most -- MENA countries that direct spending on military forces and counterterrorism programs.
Figure One: A Key Uncertainty in National security Economics: The Rising Number of Terrorist Incidents Importance of Internal Security Expenditures in the MENA Region: North Africa: Trends in Total Number of Incidents
Egypt and the Levant: Trends in Total Number of Incidents Cordesman/Toukan MENA National Security Economics 22.3.17 3
Gulf and Yemen: Trends in Number of Incidents
Source: START Data Base: http://www.start.umd.edu/gtd/search/Results.aspx?chart=attack&casualties_type=b&casualties_max=&start_yearonly= 2000&end_yearonly=2015&dtp2=all&country=60, accessed 21.3.17 Cordesman/Toukan MENA National Security Economics 22.3.17 4
Reporting on Direct Defense, Military, and National Security Spending There are several major sources of data on direct national spending on military and security forces: • National reporting by individual countries -- which are not comparable and where data are often lacking or heavily altered for internal political purposes. • The United Nations Report on Military Expenditures which draws heavily on two outside NGOs -- the IISS and SIPRI -- and but does not publically reporting on national security spending by given MENA countries (e.g. Egypt and Saudi Arabia) because it is an" official page for reporting online to the UN Report on Military Expenditures, to be used only by authorized Government officials of the UN Member States."2 The UN notes that, " Since the UN General Assembly established the reporting system for military expenditures, known as the United Nations Instrument for Reporting Military Expenditures, a total of 126 UN Member States have a submitted a report to the UN Secretary-General regularly or at least once. But only a minority of States report in any given year, and a small number of States consistently report every year. In addition, there are significant disparities in reporting by States among different regions."3 • The International Institute for Strategic Studies (IISS), which does not politicize its data, and does make a concerted annual effort to develop comparable data for every country in the world as part of its create of a global military data base and annual Military Balance.4 • The Stockholm International Peace Research Institute (SIPRI) which also does not politicize any of its data, and does make a concerted annual effort to develop comparable data for every country in the world as part of its create of a global military data base and annual Military Balance.5 • The World Bank, which does not report on national security spending per se, and often draws on SIPRI data, but does report useful graphs of comparable military spending as a percent of GDP at http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS. • The CIA, which also reports on military spending as a percent of GDP, but seems to rely largely on SIPRI data. Its summary table dates back to 2012, but data through 2015 are often available by going to the military section of its individual country reports.6 • IHS Jane’s, which provides useful open source commercial data on some countries. This report draws primarily on the IISS and SIPRI data, and a modeling effort by Dr. Abdullah Toukan that draws on a mix of IISS, SIPRI, and IHS Jane’s data. In general, the IISS data are used for recent years because they extend to 2016 and reflect the most recent and accurate trend data available. SIPRI data are used to provide a standard of comparison, and illustrate the level of uncertainty involved, as well as to longer-term trends because the SIPRI model attempts to provide directly comparable data in constant US dollars over an extended period of time. These data on military expenditures and military efforts from the IISS and SIPRI are shown in Figure One and Figure Two respectively. These two Figures do illustrate how different the data can sometimes be for the same countries and the same years, but broadly agree in most of the trends reflected in each Figure. The IISS and SIPRI data are presented in the same format to ensure that they can be compared directly. However, they report on different kinds of current versus constant dollars, and draw on different sources in many cases. Cordesman/Toukan MENA National Security Economics 22.3.17 5
Other differences between the SIPRI and IISS data are discussed in detail in several parts of this report. It is not possible, however, to explain these differences them in detail. The IISS and SIPRI do not provide descriptions by country of how they obtain the data, the changes they make in country data, and exactly what aspects of national security spending are included -- especially adjustments to take account of counterterrorism spending, intelligence costs, defense industries, all aspects of military procurement, and the impact and civil revenues of military industries and operations.
LOOKING AT THE BROAD TRENDS IN MILITARY SPENDING AND NATIONAL SECURITY EFFORTS Region-wide trends provide only limited insight into the forces driving military spending, arms transfers, and the impact of regional tensions and conflicts. They do, however, help put the region in perspective relative to the military economics of other parts of the world. Total Regional Spending Figure Two shows that the International Institute of Strategic Studies (IISS) estimates that total regional defense spending reached $181.1 billion in 2014, $176.1 billion in 2015, and stayed at $141.4 billion in 2016 – in spite of a more than 50% cut in petroleum prices and revenues that sharply cut the resources of the region’s wealthy oil states.7 As noted earlier, regional military spending was only part of recent national security spending, which included a steadily rising expenditure on counterterrorism and rising spending on national stability. The IISS estimated, however, that defense spending alone still reached 6.01% of the region’s GDP in in 2014, which was three times the level of effort called for on the part of NATO, rose of 7.05% of the regions total GDP in 2015, and stay at 5.95% in 2016. A sharp continuing population rise did, however, help reduce per capita military spending from $503 in 2014 to $437 in 2015, and $356 in 2016. 8 Comparing Spending Between Global Regions It is even harder to compare spending between regions than it is to compare national spending within a region, and once again estimates differ by source. The IISS estimated, however, that the MENA region accounted from some 10% of the world’s military spending in 2016, and this estimate sharply understates the total since the IISS has no estimate for Kuwait, Iraq, and Syria; almost certainly under states Iran’s expenditures, and often seems to undercount the equipment purchases and other aspects of military spending in key states like Egypt and Saudi Arabia.9 Figure Three shows that SIPRI includes Turkey in the Middle East and provides a separate break out of the data on North Africa. SIPRI also adjusts all of its data through 2015 to 2014 constant 2009 US dollars, although it does provide a figure in current dollars for 2015. SIPRI does not provide a regional total for 2014 or 2015 because it feels inadequate data are available on Iraq.10 Its total for MENA in 2014 is $199 billion, which is 11.3% of the world total -- roughly comparable to the IISS total -- allowing for the fact that SIPRI includes Turkey and the IISS does not. Cordesman/Toukan MENA National Security Economics 22.3.17 6
Top Ranking MENA Spenders Figure Two shows that the IISS estimates that three of the world’s top defense spenders were in the MENA region in 2016: Saudi Arabia (Ranking fourth at $56.9 billion), Israel (14th at $19.0) billion, and Iraq ($18.1 billion). To put these data in perspective, the IISS estimates that the U.S. ranked first at $604.5 billion, China ranked second at $145 billion, Russia ranked third at $58.9 billion, the U.K. ranked 5th at $52.5 billion, and France ranked eight at $47.2 billion. (Saudi Arabia ranked third in 2015). In contrast, Figure Three shows that SIPRI estimates that Saudi Arabia spent $87.2 billion in current dollars in 2015, Israel spent $16.1 billion, and Iraq spent $13.1 billion. The SIPRI estimate for Saudi Arabia is notably higher, but lower for Israel and Iraq. To put these data in a broader perspective, SIPRI estimates that the U.S. ranked first in current US dollars in 2015 at $506.0 billion, China ranked second at $214.8 billion, Russia ranked third at $66.4 billion, the U.K. ranked 5th at $55.5 billion, and France ranked eight at $50.9 billion. TRENDS IN MILITARY SPENDING BY NATION AND SUBREGION The MENA region does not form a consistent region in strategic terms, and there is no agreement on how to define it. Some analysts include Turkey, Mauritania, the Sudan, and Somalia. Even if the definition is limited to clearly Arab states, Israel, and Iran, it remains divided into three main subregions, each with a different character, and each lacking any consistent mix of forces that drives its military efforts and spending. Accordingly, the analysis in this report breaks the MENA region into three major subregions: North Africa, Egypt and the Levant, and the Gulf and Yemen. These three subregions do not have single center gravity or driving force behind their military economics, but the interactions between the states in each subregion are clearer, and each subregion does a reflect a different set of arms races and sources of conflict. The use of such subregions, and focus on national differences, also provides a more functional way of organizing the detailed trends and data which support this study, and providing a set of three Annexes on each subregion that group a complex mix of data together that graph and chart key trends in depth. As has been touched upon earlier, Annex A covers North Africa. Annex B covers Egypt and the Levant, and Annex C the Gulf and Yemen. These three annexes show both estimates of national security spending on military forces and counterinsurgency and key indicators of spending on national internal stability, the third key element of national security economics in the region. They help highlight the fact that national security spending must deal with far more than military forces, and that burden sharing studies that only focus on levels of military spending and dangerous inadequate results. North Africa The North African subregion consists of four different states – Morocco, Algeria, Tunisia, and Libya -- heavily influenced by Egypt which is a broader regional power that bridges North Africa and the Levant. The region has long been driven in the past by rivalry between Morocco and Algeria, and a low-level insurgency being fought between Cordesman/Toukan MENA National Security Economics 22.3.17 7
Morocco and the rebels in Polisario over control of the former Spanish Sahara. Morocco has effectively won this conflict, but the Polisario still has Algerian support and Moroccan and Algerian relations remain tense – helping to drive military spending and the regional arms race. Morocco has become a moderate parliamentary monarchy, and has sought to focus on development and internal stability – key priorities in one of the poorest areas of the MENA region. Algeria’s military plays a critical role in control of the state, and has long spent relatively high levels of the nation’s resources on military forces. It fought a long and exceptionally cruel and violent civil war against Islamist movements during 1990 and 2000 that it effectively won. It remains a major military spender in spite of serious development and internal stability problems. Libya was controlled by a dictator – Muammar Qaddafi -- between 1961 and a set of violent political upheavals that began in 2011 and led to his death that October. He used the nation’s oil wealth to conduct a major military build-up that created a large pool of weapons that Libyan forces lack the training and strength to use effectively and place a major strain on the economy. His death triggered a regional and tribal civil war that still continues, and has meant Libya has now lack effectively governance and any clear direction of its military efforts and spending for more than half a decade. Tunisia is a small nation that has not sought to develop large military forces. It was the source of the tensions between its people and a corrupt regime that produced a major political revolution in 2011. Unlike most of the states caught up in the upheavals that began in 2011, Tunisia has so far been able to create a functional – if uneasy – compromise between its moderate Islamists and more secular political factions. Its revolution has, however, create major economic problems in terms of investment and tourism and creating internal stability is a critical challenge. It also has radical violent Islamist extremist elements that have been a major source of volunteers for ISIS. All four North African states face a threat from violent Islamist extremists, as well as different mixes of sectarian, ethnic tribal and regional tensions. Migration, human trafficking, and narcotrafficking also present a challenge. • Algeria has long been a major military spender. Its military forces play a major role in leading its government, and it long been a major rival of Morocco and supported the Polisario and its claims to the Spanish Sahara to put pressure on its neighbor. The IISS estimates that it spent $11.7 billion on military forces and security in 2014, $10.4 billion in 2015, and $10.6 billion in 2016. SIPRI only provides estimates in US current dollars for 2015. Its total is $10.4 billion.
• In contrast, Morocco seems to feel Algeria and the Polisario now represent a diminishing threat. The IISS estimates that it spent $3.8 billion on military forces and security in 2014, $3.3 billion in 2015, and $3.4 billion in 2016. SIPRI estimates $3.3 billion for 2015. It cannot ignore its security problems
• The Libyan civil war brought an end to Libya’s already declining military ambitions. The IISS does not provide estimates for 2014, 2015, or 2016. SIPRI only provides an uncertain estimate of $3.3 billion for 2014.
• Tunisia has suffered from major political upheavals since 2011,and has never been a significant regional military power. The IISS estimates that it spent $906 million on military forces and Cordesman/Toukan MENA National Security Economics 22.3.17 8
security in 2014, $979 million in 2015, and $979 million in 2016. SIPRI estimates $980 million for 2015. Egypt and the Levant This subregion includes Egypt, Israel, Jordan, Lebanon, and Syria. The peace treaties between Israel and Egypt and Israel and Jordan have brought a kind of stability to the subregion, and eased the strain of national security spending, but they have not led to a stable peace between Israel and the Palestinians or a peace with Syria. As a result, they have not ended each country’s military build-up and exceptional levels of military spending. The tensions left by a long Lebanese civil war continue to divide that country. The political upheavals that began in 2011 have created major stability problems in Egypt, and one of the most brutal civil wars in modern history in Syria, as well as helped trigger the rise of violent Islamist extremism, and ISIS seizure of significant territory in Eastern Syria and western Iraq. Egypt is one of four moderate Arab states -- Egypt, Jordan, UAE and Saudi Arabia – that could develop some form of future Security Architecture for the MENA region – with the support of smaller Arab states and Iraq – if it can defeat ISIS and establish a unified and independent state. At present, however, its internal stability and economic problems present a major limiting factor on its ability to play such a role and its regional influence. Syria has become divided into warring zones controlled by the Assad regime with Iranian and Hezbollah support, a mix of moderate and Islamist extremist Arab rebels, and ISIS. Its civil war has shattered the country, and created massive refugee problems for its Jordanian, Lebanese, and Turkish neighbors. Its civil war has triggered major outside intervention by Iran, the Lebanese Hezbollah, Russia, a U.S.-led coalition, Turkey, and several Arab Gulf states. At the same time, its struggles against ISIS cannot be separated from the ongoing fighting between ISIS and the Iraqi government, and the broader rise in tensions between the Arab minorities in Syria and Iraq and the Arab majorities in these countries. Tensions between Israel and the Palestinians have led to continuing violence in the Gaza, Israel, and the West Bank, and to major clashes and an ongoing arms race in missile and rocket forces between Israel and the Hezbollah in Lebanon – a non-state actor that has major Iranian support and plays a role in the Syrian civil war. • Egypt has remained one the region’s major and advanced military powers in spite of its peace with Israel and the political and economic turmoil it suffered from after 2011. Egypt underwent a massive popular revolution in 2011, elected Islamic government, and then experienced a military takeover that still continues. Since that time, Egypt’s national security efforts have focused on internal security and internal stability, but largely through counterterrorism and government control, rather than by dealing with the causes of instability, and it continues to spend large amounts of its national resources on the military.
Violent Islamic extremists remain a threat, and the Egyptian government is fighting a low level war against such extremists and tribal dissidents in the Sinai. At the same time, Egypt is a major regional power. It cannot ignore the uncertain stability of its neighbors, the growing impact of Iran, and civil war in nearby states like Libya and Syria. Cordesman/Toukan MENA National Security Economics 22.3.17 9
Egypt has limited the growth of it military expenditures but they still put a major burden on a state that has a low per capita income and major development problems, that has lost much of its tourist trade, and that faces serious problems in attracting outside investment. Egypt has tried to improve its rate of development and its economy, but so far has made on limited progress in improving internal stability as distinguished from internal security.
The IISS estimates that Egypt spent $5.5 billion on military forces and security in 2014, $5.3 billion in 2015, and $5.3 billion in 2016. SIPRI estimates $5.4 billion for 2015. It is also unclear how fully these totals reflect the total U.S. military aid it has received during these years, and how Egypt accounts for the revenues earned by its military. It also clear that Egypt is critical to any attempt by the major Arab states to create a broader security structure.
• Israel too has remained a major regional military power in spite of its peace with Egypt and Jordan, and is the MENA region’s only nuclear weapons state. Even though it is a peace, it must prepare for the risk if a major war, as well as a growing missile and rocket threat from Iran and the Hezbollah. It faces serious internal security problems because of the lack of an Israeli-Palestinian peace settlement, and faces serious terrorism threat from groups like the Palestinian Islamic Jihad and elements of Hamas.
Syria is now deeply divided in a brutal civil war, but may present threats in the future. Israel does, however, benefit from the fact that most Arab states face other higher priority threats like Iran and must focus on serious internal security and stability issues.
The economic burden of military security alone is a heavy one, although Israel has one of the region’s most successful economies.\ The IISS estimates that Israel spent $20.2 billion on military forces and security in 2014, $15.4 billion in 2015, and $15.9 billion in 2016. SIPRI estimates $16.1 billion for 2015. It is unclear, however, how well these totals reflect the total U.S. military aid it has received during these years, and whether some spending should be offset because of Israel arms exports.
• Jordan has long faced major limits on its resources, but continues to spend enough on military forces and arms imports to remain one of the region's most effective military powers. Its strategic location makes it critical to the Arab-Israeli peace process, the security of Iraq and Saudi Arabia, and efforts to bring some form of stability in Syria. This puts Jordan in a central strategic role in any future security architecture of the region.
Jordan does, however, faces serious challenges from a wave of Iraqi and Syrian refugees, differences between the Palestinian and Transjordanian portions of its population, slow economic development and a low per capita income, the impact of regional violence on external investment of tourism, and the regional threat of extremism and terrorism.
The IISS estimates that Jordan spent $1.3 billion on military forces and security in 2014, $1.4 billion in 2015, and $1.4 billion in 2016. SIPRI estimates $1.6 billion for 2015. These levels are barely adequate to main its military forces and internal security structure, but Jordan does have one of the best managed militaries and use of military budgets in the region.
• Syria faced major political upheavals in 2011 that led to one of them most bitter civil wars in the region’s history. The nations is deeply divided in warring factions, has separate outside military support and forces from Iran, the Hezbollah, Russia, Turkey, and a U.S.-led coalition. It has since faced a major challenge from IISS, which took control of important parts of Syria, and established the capital of its “Caliphate:” in the Syria city of Raqqa.
IISS’s ability to hold territory has been sharply reduced over the last two years and it may well be driven underground in 2017. This with still, however, will leave a nation divided between the Assad forces and mix of Arab and Kurdish rebel elements, which include Islamist extremist elements and some tied to Al Qaida. The rivalries between outside powers, and Arab, Kurd, and minority also present national security and stability problems. Cordesman/Toukan MENA National Security Economics 22.3.17 10
There is no reliable way to quantify Syrian military spending or arms transfers at the state level, by faction, or by outside force in the middle of its complex civil war. Its economy is shattered, half its population is living outside it home of is refugees, and estimates indicate it might take a decade to recover, much less develop. and the only spending on national stability consists of outside relief efforts.
The IISS and SIPRI do not make estimates for Syria for 2014-2016, but some trend estimates by the authors are provided in Annex B.
• Lebanon has achieved a tenuous stability and modus vivendi between its competing faction, its military have performed steadily better in fight ISIS, and the Hezbollah has been focused on supporting the Assad regime in Syria. Lebanese military forces still have limited funds and modernization, however, and the Hezbollah has rebuilt and sharply expanded its missile and rocket forces and ability to threaten Israel.
Lebanese unity remains uncertain, development has been slow and limited, and Lebanon must now cope with a massive influx of Syria refugees. Internal stability remains a serious issue.
Lebanese government military forces still face serious challenges because of Lebanon’s divided politics, and face a major rival set of forces in the Hezbollah. They have, however, increased their spending in recent years. The IISS estimates that Lebanon spent $1.3 billion on military forces and security in 2014, $1.5 billion in 2015, and $1.7 billion in 2016. SIPRI estimates $1.6 billion for 2015. The Gulf and Yemen This subregion includes Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the UAE, and Yemen. The Gulf subregion is the center of a major arms race between Iran and its Arab neighbors. It has experience a long series of wars and crises since the fall of the Shah in 1979-1980 and the beginning of the Iran-Iraq war in 1980. It achieved a degree of effective strategic partnership in working with the U.S. and other outside states in defeating an Iraqi invasion and occupation of Kuwait in 1990-1991. However, the U.S. led invasion of Iraq in 2003 created a lasting level of instability in that country, destroyed its ability to act as a military counterbalance to Iran, and triggered serious sectarian tension between its Sunnis and Shiites as well as ethnic tensions between its Arabs and Kurds. The Gulf Arab states have never transformed the Arab Gulf Cooperation Council (GCC) – which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE into a effective alliance in terms of coordinated force plans, high levels of standardization and interoperability, effective common training and integrated operational planning, cooperation in programming and budgeting, or the creation of common facilities, command and control, air defense maritime surveillance, and other aspects. Cooperation in counterterrorism is equally limited and often largely conducted on a bilateral basis. Each country has coped with the internal stability problems that became all too apparent in 2011 largely on its own. The GCC also does not include Jordan and Egypt, and broader efforts to create wide Arab security cooperation and coalitions have been largely political and symbolic, with only a few of the state involved committing serious military forces. • Saudi Arabia is the de facto leader of the Arab Gulf states and the Gulf Cooperation Council – one of the few Arab efforts at national security cooperation that have gone beyond the level of Cordesman/Toukan MENA National Security Economics 22.3.17 11
political rhetoric. It cooperated closely with the United State leading the alliance that ended the Iraqi invasion of Kuwait, and has strategic partnerships with the United States, and to a lesser degree with Britain and France.
Saudi Arabia now cooperates closely with the UAE, and both countries have provide the key forces now supporting the Yemeni government in the civil war in Yemen, It is conducting a major arms race with Iran and is now actively at war and support the government of Yemen in its fight against Houthi and Saleh factions.
These developments and Saudi Arabia’s massive military spending make it a key strategic partner, The IISS estimates that Saudi Arabia spent $80.8 billion on military forces and security in 2014, $81.9 billion in 2015, and $56.9 billion in 2016. SIPRI estimates $87.2 billion for 2015. Like other Gulf petroleum exporters, Saudi Arabia has been forced to take account of major cuts in its petroleum revenues that have resulted from the drop in world petroleum prices that began in 2014, and the cost of major (2030) reform plans designed to provide improved internal stability.
Like the other Arab Gulf states, Saudi Arabia has sometimes focused on buying the highest capability aircraft for their glitter factor without provide the full range of military capabilities and readiness to use them effectively, It has made important progress in these areas in recent years, and has used its high levels of spending to created steadily more effective National Guard and MOI counter terrorism forces. It has also improved some aspects of its army and naval forces. It has not, however, effectively used its resources to increase its readiness., developed sufficient special forces and counterinsurgency/asymmetric warfare capabilities, or developed modern naval warfare capabilities in either the Gulf or Red Sea with the needed level of readiness and mission focus in area like mine warfare and countering the IRGC asymmetric warfare threat.
Internal stability does present a major challenge. Al Qaida in the Arabian Peninsula (AQAP) has largely been driven out of the Kingdom, but has a major base in Yemen. Saudi Arabia has also recognized that maintaining national stability requires a massive reform and development efforts that are now part of its 2030 plan and that set tangible goals for action by 2020. The costs of this national stability and development plan are still being determined, but they will be high and a critical aspect of national security. As Annex C shows, Saudi Arabia faces other major challenges because of recent cuts in its petroleum export income, and it is far from clear that it can sustain its current military, counterterrorism, and arms import efforts, and properly fund its 2030 plan
• The UAE has become one of the most effective military forces in the MENA region, in spite of its limited size and native population and is now actively fighting alongside Saudi Arabia in Yemen, as well as building up its forces to meet the threat from Iran.
The UAE also has effective counterterrorism forces, and its wealth and use of largely amounts of foreign labor limit its internal stability problems. It is a key element in any effort to create a broader Gulf Cooperation Council (GCC) or regional security structure.
The UAE does, however, face the impact of major cuts in its petroleum exports, and has had to limit some spending and raise its government charges and revenues. The IISS does not provide estimates for 2014, 2015, and 2016. SIPRI only provides an estimate of $22.8 billion for 2014.
• Iran has faced major threats from Iraq, but has also sought to expand its military and political influence in both the Gulf and Levant subregions, and particularly in Bahrain, Iraq, Kuwait, Lebanon, and Yemen. This, in turn, has triggered a major ongoing arms race with its Arab neighbors in the GCC, and particularly Saudi Arabia and the UAE.
Iran has been unable to import many of the modern arms it needs because of UN and other embargoes, has increase some aspects of domestic arms production, and has found lower cost substitutes for high cost forces: missiles and a nuclear weapons program, the creation of an asymmetric mix of naval, missile and air forces to threat maritime traffic in the Gulf, and the use Cordesman/Toukan MENA National Security Economics 22.3.17 12
of proxy and forces and IRGC volunteers and train and assist units to exploit tensions and gain influence in Bahrain, Iraq, Lebanon, Syria, and Yemen.
Iran uses these efforts to expand its regional influence and put pressure on its Arab rivals, and makes the most effective use of military expenditures of any state in the MENA region and its successes that spending levels are not necessarily a valid indication of national security capability. At the same time, they have driven its Arab neighbors into a massive military build-up and modernization efforts that Iran can match and helped focus U.S., British, and French forces on aiding the Gulf Arab states in deterring and defending against Iran.
It also has found some recent relief from sanctions because of the JCPOA and Russia has sold it the modern S300 air defense system. It still, however, must deal with the impact of decades of limited access to modern arms imports and a lack of modernization in all of its military services and the IRGC.
Iran’s implementation of the initial phases of the JCPOA nuclear arms agreement have limited Iran's ability to acquire nuclear weapons in the near term. It is seeking to give its conventionally armed ballistic and cruise missiles precision guidance, however, which could greatly increase the military lethality of its missile forces.
The IISS estimates for Iranian military spending seem too low. The IISS estimates that it spent only $15.8 billion on military forces and security in 2014, $14.1 billion in 2015, and $15.9 billion in 2016. SIPRI estimates only $10.3 billion for 2015. These estimates may not include the cost of Iran’s defense industries, all its procurements, and some of its missile forces, as well as the full costs of its Islamic Revolutionary Guards Corps (IRGC).
• Iraq remains a deeply divided nation with deep differences between its Sunnis and Shi’ites, between various Shi’ite factions, and between Arab and Kurd. Its government is weak and corrupt, and deeply divided, its population and economy have suffered from near constant crisis and conflict since it invaded Iraq in 1980, it has serious refugee and displaced person problems, and internal stability is a key issue, Iran is competing with the U.S. for influence over Iran and it is far from clear that any defeat of ISIS will not lead to new rounds of power struggles and sectarian and ethnic violence or tension.
Iraq has become a major military spender. It is actively at war with ISIS and fighting to regain the territory it lost of ISS in 2011 and 2012. The IISS estimates that it spent $18.9 billion on military forces and security in 2014, $21.1billion in 2015, and $17.9 billion in 2016. SIPRI estimates only $13.1billion for 2015, which seems too low.
At the same time, Iraqi military spending is under significant financial pressure because of cuts in Iraq’s oil export revenues and the cost of dealing with civilian recovery and refugees. Iraq does, however, have substantial military aid from a U.S. led coalition directed against ISIS as well as some aid from Iran.
• Bahrain is a small Gulf power facing serious pressure from Iran and that is experiencing even more serious internal tensions between its ruling Sunni elite and its Shi’ite majority. This led to major political upheavals after 2011, and Saudi and UAE intervention to help preserve its stability, but sectarian tension remains a critical issue, and internal security is a serious problem.
Bahrain faces serious economic challenges. It has largely exhausted its petroleum resources, has a growing native population that has serious employment problems, and is heavily dependent on Saudi aid and over dependent on a large foreign labor force.
Bahrain still, however, maintains relatively high quality forces. The IISS estimates that it spent $1.3 billion on military forces and security in 2014, $1.59 billion in 2015, and $1.5 billion in 2016. SIPRI estimates $1.4 billion in 2015. It also hosts the U.S. 5th Fleet and U.S. air and naval forces, and benefits from being a strategic partner to the U.S. Cordesman/Toukan MENA National Security Economics 22.3.17 13
• Kuwait is another small Arab state, and is the most vulnerable Arab Gulf state in terms of size and location. It has been invaded in the pat by Iraq, and is located in the upper Gulf with common borders with Iraq and next to Iran. It has joined its Arab neighbors in seeking to deter Iran, but its internal politics are deeply divided, it is experiencing some sectarian tension that is being exploited by Iran.
Its creation of military forces and economic development have been limited by its internal politics, divisions in its national assembly, and tensions between the assembly and its royal family.
Its military and national security spending are under pressure because of the cuts in world oil and gas prices, and the drop in its petroleum revenues. The IISS estimates that it spent $4.8 billion on military forces and security in 2014 and $4.3 billion in 2015, but does not provide an estimate for 2016. SIPRI only provides a higher estimate of $5.9 billion for 2014.
• Oman occupies a critical strategic location at the mouth of the Gulf, and along the southern side of the Strait of Hormuz and on the Indian Ocean. It is a member of the GCC, but has sought to maintain good relations with Iran and has not joined Saudi Arabia and the UAE in the war in Yemen.
Like most of its neighbors, Oman faces serious internal stability problems because of a rapidly growing population, severe limits to its arable areas and water, hyperurbanization, and the need to create more jobs for the large number of young men and women (youth bulge) entering its labor force. It has attempted to limit reporting on its internal security problems but these remain an issue.
Oman has effective forces, but its economic development has been slow and it faces the same crisis in petroleum expert revenues as its neighbors. Even so it is steadily building up its forces, and spends a large percentage of its GDP on national security. The IISS estimates that it spent $9.6 billion on military forces and security in 2014, $9.9 billion in 2015, and $9.1 billion in 2016. SIPRI estimates $9.9 billion for 2015.
• Qatar is a small largely Sunni state that shares a major gas field with Iran. It a member of the GCC, but has sought to play an independent political and military role in the Gulf and in dealing with the civil war in Syria.
Its small population, massive gas resources, and use of low cost foreign labor have largely insulated it from the drop in world petroleum prices, but it is still taking some measures to increase revenues and control costs.
Qatar has built up its forces in recent years, but neither the IISS nor SIPRI provide spending estimates for 2014, 2015, or 2016.
• Yemen is a moderately sized, highly populated state that shares a common border with Saudi Arabia and Oman, and occupies a strategic position with an Indian Ocean coast, and on the northern side of the Bab el Mandab – the strait that controls the southeastern entrance to the Red Sea and can affects most traffic through the Suez Canal.
It has been the subject of nearly continuing crises and conflicts since the Aden Emergency in late 1960s, and its unification in 1990 came largely because South Yemen (the PDRY) – which had long challenged North Yemen (the YAR) collapsed because of internal power struggles. Its unity remained tenuous, and its regime was corrupt and provided weak governance and very little economic development relative to its rapidly growing population.
The political upheavals that began in the region in 2011 triggered a major political crisis in a country with deep sectarian and tribal divisions, and government that largely failed its people. Islamist extremism and the rise of al Qaida on the Arabian Peninsula became a critical problem, Cordesman/Toukan MENA National Security Economics 22.3.17 14
and no serious effort was made to deal with growing water problems, a drug economy, and limited and declining petroleum export revenues.
Efforts to create a more effective government led to power struggles between the new government and Yemen’s previous dictator – Saleh – who still had the loyalty of much of the Army. At the same time, a Shi’ite movement in the northwest – the Houthis – became a major factor in an alliance with Saleh and drove the government out of much of Yemen. It did so with at least some Iranian support.
Saudi Arabia had already had major security problems on its border, and had fought a low-level border war with the Houthi in 2009. It responded by forming a coalition and joining with the UAE in intervening to support the Yemeni government in 2015. This coalition had a massive superiority in airpower, but not in ground power. It made early gains, but the war has reached a near stalemate, and become a massive humanitarian disaster in one of the least developed and poorest countries in the Arab world. It has also become a major source of tension between Iran and Saudi Arabia and the UAE.
Development has turned into collapse. Civil war has disrupted every aspect of its government’s operations. There are no credible data on the cost of the war, and its impact on the national economy. The IISS does not provide estimates for 2014, 2015, and 2016. SIPRI only provides an estimate of $1.7 billion for 2014. GCC versus Iranian Military Spending One key military spending trend is clear. The GCC states – led by Saudi Arabia and the UAE – have long vastly outspent Iran on military forces. The IISS data seem to significantly understate real Iranian military internal security spending, but Figure Four is still broadly correct in showing that the GCC spent some $117 billion on military forces in 2015 compared to only $15.9 billion for Iran – more than seven times as much. Saudi Arabia alone spent $81.9 billion, or over five times as much. The UAE spent $14.4 billion or roughly the same, and Iraq spent a substantially greater $21.1 billion. As later sections of this analysis show, the Arab GCC lead of Iran was far greater in arms imports and military modernization. Ranking States by Spending as a Percent of GDP While national security economics normally focus on the cost of national security forces, they are shaped by the overall political and economy of given states and non-state actors. As a result, the percentage of their economy or GDP that such states pay for national security forces has become a crude measure of national effort and sometimes in comparing the “burden” of national security forces. Such comparisons have more limitations than value. Such percentages ignore the size of countries and their overall development, and the impact of national security spending on their people’s lives and the nation’s stability and development. High percentages do not necessarily create effective forces, and increases or decreases of several percent may or may not achieve meaningful strategic and military results. In general, such percentages say nothing at all about spending on national stability, and do nothing to provide any useful indication of the internal security effort. They normally at best only provide insight in one third of the real world economics of national security, and say nothing about the effective of what is being funded in terms of real world military and national security needs. Cordesman/Toukan MENA National Security Economics 22.3.17 15
This problem is compounded by the fact that the metric combines all of the broader uncertainties in estimating and comparing national GDPs with those in defining and estimating national security costs. As a result, they have very limited analytic value, and are a terrible way of assessing the comparative “burden” of national security spending. This is why Appendix A, Appendix B, and Appendix C use a wide range of different measures of national security effort and economic development and stability. Nevertheless, military and security spending as a percent of GDP is one of the few metrics where it is possible to make some direct comparisons of cost and economic impacts. The IISS Military Balance ranks seven MENA states among the top 15 in terms of defense and security budgets as a percent of GDP: Oman (15.3%), Iraq (11.6%), Saudi Arabia (8.9%), Algeria (6.3%), Israel (6.1%), Bahrain (4.8%) and Jordan (4.9%). It also notes that it could not rank Kuwait, Libya, the UAE, and Syria because sufficient comparable data were not available. 11 To put these figures in perspective, various sources rank the U.S. at spending 3.2% to 3.6% of its GDP in national security in 2016. Figure Three shows that SIPRI reflects some of these same trends, but again differs from the IISS in many of its estimates. SIPRI estimates that Oman spent 16.2% of its GDP on security in 2015 versus an IISS estimate of 15.42%. SIPRI estimates that Saudi Arabia spent 13.7% of its GDP on security in 2015 versus an IISS estimate of 12.6%. SIPRI estimates that Iraq spent 9.1% of its GDP on security in 2015 versus an IISS estimate of 12.9%. These are not striking differences, but are typical of the fact that there is no clear agreement from source to source on such data. SIPRI also indicates that Bahrain spent 4.6% of its GDP in 2015, Algeria spent 6.2%, Israel spent 5.4%, Jordan spent 4.2%, and Lebanon spent 4.1%. SIPRI does not provide estimates for Kuwait, Libya, Qatar, Syria, and Yemen. It does however list several states that spent at lower levels: Morocco (3.2%), Iran (2.5%), Tunisia (2.2%), Turkey (2.1%), and Egypt (1.7%) In contrast, the U.S. spent 3.3%, Russia spent 5.4%, France spent 2.1% and Britain spent 2.0%, and China spent only 1.9%. From a so-called "burden sharing" perspective, it is interesting that all but one Middle Eastern state for which there is IISS or SIPRI reporting spent more than 2% level of GDP NATO is seeking, a total of four spent multiples of the U.S. level of roughly 3% of GDP, and a total of eight spent more than the U.S. More importantly, the IISS and SIPRI data indicate that seven countries – Oman, Iraq, Saudi Arabia, Algeria, Israel, Bahrain, and Jordan– are spending percentages of their GDP that probably present serious problems in meeting popular need, funding economic reform and growth, and providing internal stability. It is not clear from the data on its forces and modernization efforts why Oman’s percentages are so high, but it is a state with serious problems in employing its youth and development and internal security is a priority. • Iraq must fund its war against ISIS and develop the forces to be strong enough to maintain its independence, particularly from Iran. Even so, it also desperately needs to fund its internal stability efforts and recovery, and to heal the tensions between Sunni and Shiite, and Arab and Kurd. Cordesman/Toukan MENA National Security Economics 22.3.17 16
• Saudi Arabia is projected to have cut back in 2016, but its level is still high relative to its need to implement its 2030 reform plan. • Algeria is a poor state with limited per capita income and no clear outside threat. It has had critical problems with internal stability in the past, and it needs to concentrate on internal security and meeting its people’s needs. • Israel is the wealthiest state in terms of recent economic performance, and cut is percentage of GDP over time, but levels above 6% still pose a strain on any economy. • Bahrain has relatively good economic data, but partly because of Saudi aid, and its main security challenges are internal stability. • Jordan faces real threats, but also has serious internal needs and has recently faced a major new strain in hosting large numbers of Syrian refugees. At the same time, the three Annexes to this study show that other MENA countries with much lower percentages also face major internal stability challenges. Many are poor states which badly need as many resources as possible to meet popular needs and expectations, and raise development levels to ones that can deal with the strains imposed by their “youth bulge” and population increases. Snapshots of Current Military Spending versus Longer Term Trends These summary data on 2014-2016 have another important limitation: They do not reflect the cost of military spending and the level of effort as a percent of GDP over time. As the data on earlier years in the IISS military balance, and in the entire SIPRI database on military spending show, they are only snapshots of current spending. The Annexes to this study do show an estimate of levels of military expenditure and military spending for each subregion of the MENA countries over time. They also show that most of today’s major spenders have made consistently high levels of military spending and spent high percentages of their GDP. There have, however, been serious fluctuations over time. The conflict over the Western Sahara and Polisario, the Algerian civil war during 1990-2000, the various Arab-Israeli conflicts, and the Iran-Iraq War from 1980 to 1988 all led the participants to make exceptional levels of military spending. History warns that today’s trends may also change in the future. A large number of regional states are now at war, preparing for war, or actively supporting another state or mixes of factions in another state. The conflict over the Western Sahara and Polisario has reach the stalemate level, but Iraq, Libya, Syria, and Yemen are fighting major civil wars, many other states support factions in these wars, and there is a broad arms race between the Arab Gulf states and Iran, but one where the Arab states involved make very different levels of effort. What is consistent is that a region with developing economies and massive population growth has spent – and spends -- far more of its economy on military forces than most developed nations, and several MENA states have led – and lead -- the world in their total military spending a percent of GDP. These spending levels are often driven y real world external and internal threats, but they also compete with key aspects of national security spending which are not possible to quantify with any precision: spending on counterterrorism and internal security, and spending on economic development and internal stability. Cordesman/Toukan MENA National Security Economics 22.3.17 17
Figure Two: IISS Estimate of Comparative MENA Military and Security Budgets and Levels of Effort Country Defense Spending Defense Spending Defense Spending Military Personnel in Current $US Millions Per Capita in as a Percent of in 1000s in 2017 Current $US GDP Active Reserve Paramilitary 2014 2015 2016 2014 2015 2016 2014 2015 2016
North Africa Morocco 153 137 139 114 98 100 3.42 3.25 3.21 16 0 145 Algeria 11,862 10,407 10,577 306 263 263 5.56 6.24 6.28 130 150 187 Libya n.k n.k. n.k 745 n.k. n.k. 10.47 n.k.. n.k. n.k. n.k. n.k. Tunisia 906 979 979 85 91 93 1.95 2.30 2.46 36 0 12 Mauritania 153 137 139 44 38 38 2.77 2.81 2.95 16 0 5
Egypt & Levant Egypt 5,451 5,335 5,330 75 72 70 2.24 2.01 1.93 439 479 397 Israel 20,152 15,400 15,578 2,935 2,298 2,322 7.53 6.18 6.09 177 465 8 Palestinian n.k n.k n.k n.k n.k n.k n.k n.k n.k 0 0 n.k. Jordan 1,268 1,320 1,448 198 210 214 4.37 4.54 4.43 101 65 15 Syria n.k n.k n.k n.k n.k n.k n.k n.k n.k 128 0 150 Lebanon 1,270 1,495 1,740 229 255 292 2.69 3.11 3.51 60 0 20
Gulf & Yemen Saudi Arabia 80,762 81,853 56,898 2,953 2,949 2,021 10.71 12.67 8.92 227 0 25 UAE n.k n.k n.k 2,564 n.k n.k 3.59 n.k n.k 63 0 0 Iran 15,801 14,174 15,882 195 173 192 3.81 3.63 3.85 523 350 40 Iraq 18,868 21,100 17,900 524 573 476 8.48 12.87 11.61 64 0 145 Bahrain 1,335 1,525 1,523 1,023 1,138 1,110 4.03 4.93 4.81 8 0 11 Kuwait 4,803 4,313 n.k. 1,751 1,547 n.k. 2.95 3.78 n.k. 16 24 7 Oman 9,623 9,883 9,103 2,991 3,008 2,714 11.77 15.42 15.26 43 0 4 Qatar 5,088 4,749 4,404 2,397 2,164 1,950 2.42 2.85 2.81 12 0 0 Yemen n.k n.k n.k n.k n.k n.k n.k n.k n.k 20 0 0
Total 181,096 176,088 145,415 503 437 356 6.01 7.05 5.95 2,256 1,683 1,076
O indicates value of less than $100 million n.k. = not known Source: Adapted from IISS, Military Balance, 2017, p. 556
Cordesman/Toukan MENA National Security Economics 22.3.17 18
Figure Three: SIPRI Estimate of Comparative MENA Military and Security Budgets and Levels of Effort- Part One Military Expenditures in Constant Millions of U.S. Dollars
Country 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Current
North Africa Morocco 2,521 2,597 2,896 3,093 3,310 3,334 3,574 4,083 4,049 3,740 3,268 Algeria 3,303 3,976 4,516 4,905 5,191 7429 7,817 8,646 9724 10,230 10,414 Libya ab 1,012 953 1,440 ...... 3,124 .. 3,289 .. .. Tunisia 553 508 549 567 582 692 696 763 922 1,078 980 Egypt and Levant Egypt 5,466 5,504 5,126 4,975 4,974 4,831 4,700 4,662 5,085 5,362 5,477 Israel 17,063 16,407 16,099 16,936 16,332 15,950 16,206 17,110 18,106 17,512 16,101 Jordan 1,050 1,466 1,680 1,953 1,848 1,812 1,597 1,486 1,550 1,613 1,616 Syria ...... Lebanon 1,462 1,604 1,470 1,771 1,984 1,851 1,876 1,972 2,270 2,236 2,239 Turkey 16,395 15,763 15,939 17,057 16,712 16,875 17,244 17,626 17,770 17,669 15,275 Gulf and Yemen Saudi Arabia c 43,397 49,872 48,949 50,299 52,350 53,062 60,041 68,810 80,762 83,354 87,186 UAE 9,622 10,224 12,457 14,666 18,393 19,980 19,685 24,114 22,755 .. .. Iran 14,276 13,142 12,629 13,220 13,446 12,150 12,639 9,984 9,901 9,969 10,625 Iraq 2,025 3,025 3,778 3,581 4,200 6,545 6,305 8,070 9,516 12,873 13,121 Bahrain 698 757 819 917 915 1,126 1,254 1,385 1,475 1,401 1,430 Kuwait 5,353 5,686 5,235 5,089 4,996 5,705 6,178 5,844 5,942 .. .. Oman b 5,624 5,967 5,424 5,076 5,362 6,178 12,614 11,807 10,951 9,843 9,883
Qatar 1,429 1,841 2,374 2,098 2,071 ...... Yemen 1,788 2,138 2,055 2,351 2,333 2,116 1,938 1,783 1,715 .. .. a Does not include spending on paramilitary forces. b. Current spending only. Excludes capital spending. c. Data for adopted budget, not actual expenditures. Figures are in US $m., at constant 2014 prices and exchange rates. For 2015, two figures are given, the first in constant (2014) US$m, the second in current (2015) US$m. Figures in blue are SIPRI estimates. Figures in red indicate highly uncertain data. ". ." = data unavailable. "xxx" = country did not exist or was not independent during all or part of the year in question.
Source: Adapted from SIPRI, Military Expenditure Data, 1988-2015, https://www.sipri.org/sites/default/files/Milex- GDP-share.pdf.
Cordesman/Toukan MENA National Security Economics 22.3.17 19
Figure Three: SIPRI Estimate of Comparative MENA Military and Security Budgets and Levels of Effort- Part Two Military Expenditures as Percent of GDP Country 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
North Africa Morocco 3.5 3.5 3.2 3.3 3.1 3.0 3.2 3.3 3.4 3.3 3.5 3.8 3.7 3.2 Algeria 3.7 3.3 3.3 2.8 2.6 2.9 3.0 3.8 3.5 4.3 4.5 5.0 5.6 6.2 Libya ab 2,.2 1.9 1.9 1.4 1.0 0.9 1.2 d d d 3.3 .. 7.3 .. Tunisia 1.7 1.7 1.6 1.5 1.4 1.3 1.3 1.3 1.3 1.6 1.5 1.6 1.9 2.2 Egypt and Levant Egypt 3.4 3.3 3.0 2.9 2.7 2.5 2.3 2.1 2.1 1.9 1.8 1.6 1.7 1.7 Israel 8.3 8.5 8.2 7.7 7.5 6.8 6.6 6.8 6.3 5.9 5.7 5.8 6.0 5.4 Jordan 5.4 6.0 5.1 4.8 4.7 6.0 6.2 6.6 5.7 5.5 4.8 4.3 4.3 4.2 Syria 5.4 6.2 5.5 5.0 4.4 4.1 3.6 4.0 4.1 ...... Lebanon 4.8 4.7 4.6 4.5 4.6 4.7 4.1 4.1 4.2 4.1 4..0 4.1 4.5 4.1 Turkey 3.9 3.4 2.8 2.5 2.5 2.4 2.3 2.7 2.5 2.2 2.3 2.3 2.2 2.1 The Gulf and Yemen Saudi Arabia 9.8 8.7 8.1 7.7 7.8 8.5 7.4 9.6 8.6 7.2 7.7 9.0 10.7 13.7 UAE 4.9 4.7 4.6 3.7 3.2 3.3 3.7 5.5 6.1 5.5 5.1 6.1 5.7 .. Iran 2.4 2.7 3.1 3.3 3.6 3.0 3.1 3.5 3.2 2.4 2.8 2.3 2.3 2.5 Iraq .. .. 1.7 2.2 1.9 2.2 2.2 2.7 2.6 3.3 3.3 3.9 4.9 9.1 Bahrain 4.6 4.7 4.0 3.2 3.1 3.0 2.8 3.6 3.3 3.6 3.9 4.1 4.4 4.6 Oman 12.4 12.2 12.1 11.8 10.8 10.3 7.6 9.3 8.3 9.8 16.2 15.0 13.9 16.2 Qatar 3.9 3.3 2.4 2.0 1.8 2.0 2.0 2.0 1.5 ...... Yemen 6.0 6.0 4.7 4.3 3.6 4.1 3.9 5.0 4.7 5.2 5.0 4.7 4.6 .. a Does not include spending on paramilitary forces. b. Current spending only. Excludes capital spending. c Data for adopted budget, not actual expenditures. d Break in series and data before may not be consistent with data after break. Figures are given as percentages. Figures in blue are SIPRI estimates. Figures in red indicate highly uncertain data. ". ." = data unavailable. "xxx" = country did not exist or was not independent during all or part of the year in question.
Source: Adapted from SIPRI, Military Expenditure Data, 1988-2015, https://www.sipri.org/sites/default/files/Milex-GDP-share.pdf.
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Figure Four: Iran’s Military Spending Compared to the GCC States
140'
120'
100'
80'
60'
40'
20' 2015'Defense'Spending'in'billions'of'USD' 0' Saudi' Bahra Kuwa Oma GCC' Jorda Yeme Qatar' Arabi UAE' Iran' Iraq' in' it' n' Total' n' n' a' 2015'Military'Spending' 1.53' 4.43' 9.88' 5.09' 81.9' 14.4' 117.23' 15.9' 21.1' 1.3' 1.89'
Source: Adapted from the IISS, Military Balance 2016 Cordesman/Toukan MENA National Security Economics 22.3.17 21
ARMS IMPORTS AND MODERNIZATION One key question that affects every aspect of the data on national security spending is what does this money go to buy and how effective is the result. Most MENA states provide almost no directly comparable public data on the details of their national security spending. Far too little data are available on the structure of military budgets in the MENA region to make broad comparisons of how they are spent by service, or on personnel and key aspects of readiness. Some comparable data are, however, available on arms imports – which dominate the level of military modernization in most MENA states. Even those states that have a major defense industry or are seeking to develop one – Israel, Egypt, and Iran – are dependent on arms imports for the bulk of their modernization. There are four major sources of arms import data that reflect some aspects of the cost and economic impact of arms imports and modernization: • The Congressional Research Service (CRS) that provides declassified U.S. estimates of total arms transfers by country -- a key source of modernization trend data.12 • The International Institute for Strategic Studies (IISS), which provides data on the MENA region drawn from the CRS report, and some data for individual years from major arms importers that seem to be drawn from U.S. government sources. .13 • The SIPRI database on arms imports, which presents estimates by a leading NGO, but ones made in constant 1990 $US dollars, and where the data are drawn largely from open sources and focused more on the sources and recipients of actual arms trans than on cost trends. • The Defense Security Cooperation Agency (DSCA), which provides detailed data on the cost U.S. arms imports by MENA state.14 These data only cover U.S. transfers but provide abroad indication of the level of support a given MENA country gets from the U.S. and its access to one of the world's most advanced suppliers of modern arms. In general, only the CRS data seem to provide comprehensive and reasonably accurate cost estimates -- although these often seem to include some aspects of maintenance as well. In any case, actual modernization in terms of military capability is better reflected by examining the rate of change in the major weapons and holdings of given forces. Here, the annual editions of the IISS Military Balance, the SIPRI data on actual weapons transfers, and the Annual Consolidated Reports of the Secretary-General issued as part of the UN Register of Conventional Arms by the UN Office for Disarmament Affairs all provide useful data, along with commercial sources such as IHS Jane's.15 The Congressional Research Service (CRS) Estimate The most reliable data for total recent spending on arms imports by recipient MENA country and source are in the Congressional Research Service (CRS) estimate that is able to draw upon the resources of the U.S. government. The SIPRI data make a useful counterpoint, but must rely largely on open source media reporting. The Defense Security Cooperation Agency (DSCA) data provide a useful picture of imports from the U.S. for the MENA countries that rely primarily on such imports, but tell little about the overall pattern of imports in other MENA countries. Figure Five shows the CRS estimate of new arms purchases or agreements in current U.S. dollars for 2008-2015. Figure Six shows the CRS estimate of the value of actual Cordesman/Toukan MENA National Security Economics 22.3.17 22 deliveries for the same period. Figure Seven provides a rough estimate of the total number of major weapons delivered as part of these agreements, although comparisons of the changes in annual holdings of major weapons in the IISS Military Balance provides a much better picture of the actual changes taking place in MENA country force structures. The CRS summarizes these trends as follows:16 The Gulf crisis of August 1990-February 1991 was a principal catalyst for major new weapons purchases in the Near East made during the last twenty-five years. This crisis, culminating in a U.S.-led war to expel Iraq from Kuwait, firmly established the United States as a guarantor of Gulf security and created new demands by key purchasers such as Saudi Arabia, Kuwait, the United Arab Emirates, and other members of the Gulf Cooperation Council (GCC) for a variety of advanced weapon systems. Subsequently, concerns over the growing strategic threat from Iran, which have continued into the 21st century, have become the principal basis of GCC states’ advanced arms purchases. Because GCC states do not share a land border with Iran, their weapons purchases have focused primarily on air, naval, and missile defense systems. Egypt and Israel have also continued their military modernization programs by increasing their purchases of advanced weaponry, primarily from the United States. From 2008-2011, Saudi Arabia was the largest purchaser with an agreements value of $52.5 billion. In 2012-2015 Saudi Arabia again held the largest number of agreements with a total value of $41 billion (in current dollars). India was again second with $23.9 billion)… The Near East has generally been the largest arms market in the developing world. In the earlier period (2008-2011), it ranked first with 54.47% of the total value of all developing nations arms transfer agreements ($115 billion in current dollars). The Asia region ranked second in 2008-2011 with 28.85% of these agreements ($61 billion in current dollars). During 2012-2015, the Near East region again placed first with 61.11% of all developing nations agreements ($156.2 billion in current dollars). The Asia region ranked second in 2012-2015 with $72.2 billion of these agreements or 31.33%. The United States was predominant in arms transfer agreements with the Near East during the 2008-2011 period with 75.08% of their total value ($86.4 billion in current dollars). Russia was distant second during these years with 5.47% ($6.3 billion in current dollars). Recently, from 2012 to 2015, the United States ranked first in arms agreements with this region with $54.6 billion (in current dollars), a 35% share. Russia accounted for 17.87% of the region’s agreements in the most recent period ($27.9 billion in current dollars)… Weapons deliveries to the Near East, historically the largest purchasing region in the developing world, reflect the quantities and types delivered by both major and lesser suppliers. The following is a summary of weapons deliveries to this region for the period 2012-2015: United States China · _52 tanks and self-propelled guns · _60 artillery · _1APC and armored car · _10 APCs and armored cars · _45 supersonic combat aircraft · _390 surface-to-air missiles · _136 artillery · _1 major surface combatant · _236 surface-to-air missiles
· _20 anti-ship missiles Major West European Suppliers · _250 APCs and armored cars Russia · _10 tanks and self-propelled guns · _210 tanks and self-propelled guns · _7 major surface combatants · _10 APCs and armored cars · _18 minor surface combatants · _40 artillery · _1 submarine · _10 supersonic combat aircraft · _20 supersonic combat aircraft · _50 helicopters · _40 helicopters · _3,880 surface-to-air missiles · _920 surface-to-air missiles · _60 surface-to-surface missiles · _170 anti-ship missiles
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All Other European Suppliers · _80 tanks and self-propelled guns · _170 artillery · _560 APCs and armored cars · _2 major surface combatants · _32 minor surface combatants · _20 surface-to-air missiles
All Other Suppliers · _10 tanks and self-propelled guns · _280 artillery · _180 APCs and armored cars · _2 major surface combatants · _20 helicopters · _270 surface-to-air missiles Cordesman/Toukan MENA National Security Economics 22.3.17 24
These data indicate that substantial quantities of major combat systems were delivered to the Near East region from 2012-2015, in particular, tanks and self-propelled guns, armored vehicles, supersonic combat aircraft, helicopters, air defense and anti-ship missiles. Although the United States, Russia, and the European suppliers were the ones who delivered the greater number of these significant combat systems, other suppliers provided important naval systems and ground equipment as well. Both aircraft platforms and naval craft are particularly expensive, and constitute a large portion of the dollar values of arms deliveries of all suppliers to this region during the 2012-2015 period. Although not necessarily as expensive as aircraft or naval vessels, other weapon systems possess significant capabilities and create important security threats in the Near East region. Such systems include anti-ship and surface-to-surface missiles. In these categories Russia delivered 60 surface- to-surface missiles to the Near East from 2012-2015. The four major West European suppliers collectively delivered 170 anti-ship missiles. Comparative Regional Trends To put these regional arms transfers into a broader international context, the CRS reports that Near Eastern or MENA states signed $115.2 billion in new arms agreements in 2009- 2011 and $156.2 billion in 2012-2015. In contrast, all Asian states signed $61.0 billion in new arms agreements in 2009-2011 and $72 billion in 2012-2015. All Latin American states signed $26.2 billion in new arms agreements in 2009-2011 and $16.5 billion in 2012-2015. All African states signed $9.1 billion in new arms agreements in 2009-2011 and $10.7 billion in 2012-2015.xvii The CRS also reports that Near Eastern states took delivery on $45.1 billion in new arms agreements in 2009-2011 and $66.7 billion in 2012-2015. In contrast, all Asian states took delivery on $44.1 billion in new arms agreements in 2009-2011 and $50.7 billion in 2012-2015. All Latin American states took delivery on $10.9 billion in new arms agreements in 2009-2011 and $12.8 billion in 2012-2015. All African states took delivery on $7.5billion in new arms agreements in 2009-2011 and $5.9 billion in 2012-2015. xviii In short, MENA states spent far more on arms imports than other regions. Key National Trends If one looks at the key national trends in Figure Five and Figure Six, most track broadly with the total military expenditures, and levels of national military effort, shown in Figure Two and Figure Three. North Africa • Algeria emerged a key importer in North Africa. It signed $4 billion worth of new arms agreements in 2008-2011 and $13.8 billion worth in 2012-2015. It took delivery on $5.5 billion worth of arms in 2008-2011 and $5.5 billion worth in 2012-2015.
• In contrast, Morocco seems the have felt Algeria and the Polisario represented a diminishing threat. It signed $5 billion worth of new arms agreements in 2008-2011 but only $1.2 billion worth in 2012- 2015.
• The Libyan civil war brought an end to Libya’s already declining military ambitions. It signed only $800 million worth of new arms agreements in 2008-2011 and only $400 million worth in 2012-2015. Cordesman/Toukan MENA National Security Economics 22.3.17 25
• Tunisia remained a negligible arms importer – just as it continued to make very limited military expenditures. It signed only $10 million worth of new arms agreements in 2008-2011, and only $500 million worth in 2012- 2015 Egypt and the Levant • Egypt was one of region’s four leading arms importers in spite of its peace with Israel and its political and economic turmoil after 2011. It signed $8.6 billion worth of new arms agreements in 2008-2011 and $21.5 billion worth in 2012-2015. It took delivery on $5.5 billion worth of arms in 2008-2011 and $5.5 billion worth in 2012-2015.
• Israel also was one of region’s leading arms importers in spite of its peace with Egypt and Jordan. It signed $5.1 billion worth of new arms agreements in 2008-2011 and $9.2 billion worth in 2012- 2015. It took delivery on $4.0 billion worth of arms in 2008-2011 and $4.8 billion worth in 2012- 2015. It is unclear, however, that these totals include all of the military-related technology and parts that Israel imported during this period.
• Jordan faced major limits on its resources, but continued to maintain enough imports to keep it one of the region's most effective military powers. It signed $52.5 billion worth of new arms agreements in 2008-2011 and $41.0 billion worth in 2012-2015. It took delivery on $1.40 billion worth of arms in 2008-2011 and $1.5 billion worth in 2012-2015.
• Syria saw a sharp decline in its formal arms imports as a result of the disruption and damage to its economy caused by its civil war. It signed $2.2 billion worth of new arms agreements in 2008- 2011 but only $600 million worth in 2012-2015. It took delivery on $2.7 billion worth of arms in 2008-2011 but only $1.4 billion worth in 2012-2015. These figures do not, however, seem to include significant aid transfers from Iran, and some from Russia and the Hezbollah. No data are available on the Syrian rebels.
• Lebanon’s government made only limited arms imports –although the Hezbollah continued a major build-up of missiles and other arms that are not included in the CRS or SIPRI estimates. It signed $400 million billion worth of new arms agreements in 2008-2011 and $600 million worth in 2012-2015. It took delivery on $300 million worth of arms in 2008-2011 and $300 million worth in 2012-2015. The Gulf and Yemen • Saudi Arabia is one of two of the world’s largest arms importers and the largest arms importer in the MENA and Gulf region. It signed $52.5 billion worth of new arms agreements in 2008-2011 and $41.0 billion worth in 2012-2015. It took delivery on $13 billion worth of arms in 2008-2011 and $17.7 billion worth in 2012-2015.
• The UAE is also one of the world’s largest arms importers. It signed $17.6 billion worth of new arms agreements in 2008-2011 but only $500 million worth in 2012-2015. It took delivery on $3.7 billion worth of arms in 2008-2011 and $5.5 billion worth in 2012-2015.
• Iran is an anomaly in the sense that its spending does not reflect many aspects of its military power and influence. As is discussed in more detail shortly, Iran faced serious sanctions on its arms imports until 2016, and the data in the IISS and Jane’s Sentinel series made only slow progress in producing many its own major weapons system, with the exception of missiles and rockets. Iran signed only $300 million worth of new arms agreements in 2008-2011 and $600 million worth in 2012-2015. It took delivery on only $300 million worth of arms in 2008-2011, and $100 million worth in 2012-2015.
• Iraq has risen to the region’s second largest arms import as a result of its war against ISIS, and efforts to recreate its pre 2003 force structure. It signed $5.2 billion worth of new arms agreements Cordesman/Toukan MENA National Security Economics 22.3.17 26
in 2008-2011 and $23.9 billion worth in 2012-2015. It took delivery on $3.7 billion worth of arms in 2008-2011 and $10.3 billion worth in 2012-2015.
• Bahrain has focused on internal security, and is protected by the U.S. as the headquarters of the U.S. 5th Fleet and as the host of a U.S. air and naval base. Its arms imports are limited. It signed $400 million worth of new arms agreements in 2008-2011 and $500 million worth in 2012-2015. It took delivery on $400 million worth of arms in 2008-2011, and only $100 million worth in 2012-2015.
• Kuwait signed $3.3 billion worth of new arms agreements in 2008-2011 and $4.7 billion worth in 2012-2015. It took delivery on $1.3 billion worth of arms in 2008-2011, and $1.9 billion worth in 2012-2015.
• Oman is increasing its arms imports. It signed $3.3 billion million worth of new arms agreements in 2008-2011 and $7.2 billion worth in 2012-2015. It took delivery on only $300 million worth of arms in 2008-2011, but $3.5 billion worth in 2012-2015.
• Qatar has become importer for a nation its size, and one that can count on U.S. protection because Qatar provide the U.S. with a key air base and facilities, It signed $$1.0 billion million worth of new arms agreements in 2008-2011 but this leaped to $22.9 billion worth in 2012-2015. It took delivery on only $300 million worth of arms in 2008-2011, but $1.7 billion worth in 2012-2015.
• Yemen’s civil war has disrupted its arms imports, and questions exist over the level of Iranian arms it has received. It signed $800 million worth of new arms agreements in 2008-2011 and only $100 million worth in 2012-2015. It took delivery on $400 million worth of arms in 2008-2011, and only $200 million worth in 2012-2015. As has been discussed early, these data show that four Arab states dominate the options for regional security cooperation: Egypt, Jordan, Saudi Arabia, and the UAE. Cordesman/Toukan MENA National Security Economics 22.3.17 27
Figure Five: Value of Arms Transfer Agreements with Near East, by Supplier (in millions of current U.S. dollars) Recipient Country U.S. Russia China Major West Other All Total European European Others 2008-2011 North Africa Morocco 2,600 0 500 1,000 900 0 5,000 Algeria 0 2,700 300 800 100 100 4,000 Libya 0 100 0 500 200 0 800 Tunisia 0 0 0 100 0 0 100
Egypt and Levant Egypt 6,800 500 800 200 300 0 8,600 Israel 5,100 0 0 0 0 0 5,100 Jordan 1,600 0 0 0 100 0 1,700 Syria 0 1,600 400 0 100 100 2,200 Lebanon 200 0 0 0 0 200 400
The Gulf and Yemen Saudi Arabia 44,900 0 400 6,000 1,100 100 52,500 UAE 14,100 100 0 1,600 1,500 300 17,600 Iran 0 100 0 0 100 100 300 Iraq 3,800 300 0 500 400 200 5,200 Bahrain 300 0 0 0 100 0 400 Kuwait 2,400 600 300 0 0 0 3,300 Oman 1,600 0 0 1,700 0 0 3,300 Qatar 200 0 0 800 0 0 1,000 Yemen 0 300 100 0 300 100 800
2012-2015 North Africa Morocco 1,200 0 0 0 0 0 1,200 Algeria 0 9,000 600 4,000 100 100 13,800 Libya 0 0 0 0 300 100 400 Tunisia 500 0 0 0 0 0 500
Egypt and Levant Egypt 1,300 9,300 400 9,400 700 400 21,500 Israel 7,000 0 0 2,200 0 0 9,200 Jordan 1,300 0 200 0 300 200 2,000 Syria 0 500 0 0 100 0 600 Lebanon
The Gulf and Yemen Saudi Arabia 17,000 0 600 7,200 16,100 100 41,000 UAE 4,200 0 800 900 2,000 200 8,100 Iran 0 600 0 0 0 0 600 Iraq 8,900 8,300 800 400 1,900 3,600 23,900 Bahrain 300 100 0 100 0 0 500 Kuwait 4,400 0 0 200 0 100 4,700 Oman 900 0 0 4,400 1,000 900 7,200 Qatar 9,900 0 0 12,100 900 0 22,900 Yemen 0 0 0 0 100 0 100
0= less than $50 million or not at all. Major West European includes France, Britain, Germany and Italy Source: U.S. government as reported by Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=utf-8&oe=utf-8, p. 47. Cordesman/Toukan MENA National Security Economics 22.3.17 28
Figure Six: Value of Arms Deliveries to the Near East, by Supplier (in millions of current U.S. dollars) Recipient Country U.S. Russia China Major West Other All Total European European Others 2008-2011 North Africa Morocco 900 0 500 300 400 0 2,100 Algeria 0 4,700 500 100 0 0 5,500 Libya 0 100 0 800 100 0 1,000 Tunisia 0 0 0 0 0 0 0
Egypt and Levant Egypt 3,800 400 500 100 200 0 5,000 Israel 3,800 200 0 0 0 0 4,000 Jordan 900 100 100 0 300 0 1,400 Syria 0 2,000 400 0 100 200 2,700 Lebanon 200 0 0 0 0 100 300
The Gulf and Yemen Saudi Arabia 5,800 0 700 5,600 900 0 13,000 UAE 1,900 400 100 700 600 0 3,700 Iran 0 200 0 0 0 100 300 Iraq 2,600 300 0 300 300 200 3,700 Bahrain 400 0 0 0 0 0 400 Kuwait 1,200 0 0 0 0 100 1,300 Oman 200 0 0 700? 0 0 500? Qatar 0 0 0 300 0 0 300 Yemen 0 100 0 0 200 100 400
2012-2015 North Africa Morocco 800 100 0 0 100 200 1,500 Algeria 0 4,500 300 600 100 0 5,500 Libya 0 0 0 0 100 100 200 Tunisia 0 0 0 0 0 0 0
Egypt and Levant Egypt 4,800 1,300 600 2,900 200 0 9,800 Israel 3,500 0 0 1,300 0 0 4,800 Jordan 1,100 100 0 0 100 200 1,500 Syria 0 1,400 0 0 0 0 1,400 Lebanon 300 0 0 0 0 0 300
The Gulf and Yemen Saudi Arabia 10,500 0 600 5,800 700 100 17,700 UAE 3,000 200 0 1,200 700 400 5,500 Iran 0 100 0 0 0 0 100 Iraq 4,400 3,700 500 400 800 500 10,300 Bahrain 100 0 0 0 100 0 100? Kuwait 1,500 300 100 0 0 0 1,900 Oman 800 0 0 2,100 200 400 3,500 Qatar 100 0 0 900 700 0 1,700 Yemen 0 0 0 100 0 100 200
0= less than $50 million or not at all. Major West European includes France, Britain, Germany and Italy Source: U.S. government as reported by Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=utf-8&oe=utf-8, p. 47. Cordesman/Toukan MENA National Security Economics 22.3.17 29
Figure Seven: Number of Weapons Delivered to the Near East, by Supplier
Source: Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=utf- 8&oe=utf-8, p. 52.
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The SIPRI Arms Import Data The longer term SIPRI data on arms transfers for individual counties are shown in the three Annexes to this main report: Annex A on North Africa, Annex B on Egypt and the Levant, and Annex C on the Gulf and Yemen. They are summarized in Figure Eight in a form as comparable to the CRS data as possible, but it should be stressed that the CRS data are in current $US dollars drawn from unclassified official U.S. government estimates and the SIPRI data are in 2009 constant $U.S. dollars and the SIPRI estimates are drawn largely from open source media reporting that often does not reflect the full range of spending reflected in the CRS or in Defense Security Cooperation Agency (DSCA) reporting It is clear from a comparison of the SIPRI estimates and official U.S. arms sales data in from the Defense Security Cooperation Agency (DSCA) that are shown in Annex A, Annex B, and Annex C that the SIPRI methodology can critically undercount the value of the transfers from at least one the key sources of arms transfer to the region. SIPRI and the CRS use very different sources and ways of reporting on costs, and there is no clear way to make comparisons between the CRS and SIPRI data that is based on the validity of the data. This analysis relies largely on the CRS data because it is drawn from U.S. government sources, but the SIPRI database should be consulted in depth where the length of the analysis makes this possible, and as noted above is particularly useful for tracking actual arms transfers as distinguish from their cost. At the same time, many of The SIPRI arms transfer data do often agree with the CRS data as to the broad trends in arms import expenditures, even when they differ significantly in detail. SIPRI and the CRS also agree on some key aspects of regional trends. The SIPRI summary report on trends in International arms transfers, 2016 highlights the role of Algeria, Iraq Saudi Arabia, and the UAE as major arms importers and as ranking among the 10 top importers in the world. SIPIRI summarizes the key regional trends as of 2016 as follows,xix Arms imports by states in the Middle East increased by 86 per cent between 2007–11 and 2012– 16. During 2012–16 28 per cent of arms transfers to the region went to Saudi Arabia, 16 per cent to the UAE and 11 per cent to Turkey. The USA accounted for 53 per cent of total arms supplies to the region, the UK for 8.9 per cent and France for 8 per cent. The region's main arms importers invested in advanced systems that can significantly increase the potential of their armed forces. For example, several states received or ordered airborne and space-based long-range sensor Algeria Algeria’s arms imports increased by 4.7 per cent in 2012–16 compared with 2007–11. Russia accounted for 60 per cent of Algerian arms imports, China for 15 per cent and Germany for 12 per cent. Algerian arms imports rose steeply in 2016, accounting for 54 per cent of all its imports (in North Africa)during the period 2012–16. Imports in 2016 included 2 frigates from Germany, 2 frigates from China and 8 combat aircraft and 180 tanks from Russia. The Gulf region Most Arab states of the Gulf are militarily involved in armed conflicts in Yemen, Syria or on their own territory and have tense relations with Iran. In 2012–16 Saudi Arabia’s arms imports increased by 212 per cent compared with 2007–11. It became the world’s second-largest arms importer, accounting for 8.2 per cent of global arms imports in 2012–16. The UAE has Cordesman/Toukan MENA National Security Economics 22.3.17 31
continuously had high levels of arms imports since 2001. Its arms imports increased by 63 per cent between 2007–11 and 2012–16. Qatari arms imports rose by 245 per cent between 2007–11 and 2012–16 as part of a program that will multiply its military assets several times. Kuwaiti arms imports increased by 175 per cent between 2007–11 and 2012–16. Due to a partial arms embargo imposed by the United Nations as well as economic pressures, Iran’s arms imports remained at a very low level in 2012–16, at 1.2 per cent of total arms transfers to the Middle East. The delivery by Russia in 2016 of four air defense systems, which do not fall under the UN arms embargo, was the first significant import of major arms by Iran since 2007. Arms imports and the fighting in Iraq, Syria and Turkey Arms imports by Iraq increased by 123 per cent between 2007–11 and 2012–16. As in 2007–11, Iraq received thousands of light-armored vehicles in 2012–16. However, it was in particular the delivery of 29 combat aircraft from the USA, 24 combat aircraft from South Korea and 43 combat helicopters from Russia that contributed to the increase. Many of the newly received weapons were immediately used in the fight against the Islamic State. Turkey was the sixth-largest arms importer globally in 2012–16 and increased its arms imports by 42 percent in 2012–16 compared with 2007–11. Imported combat aircraft and helicopters, tanks and artillery were deployed in the fighting with Kurdish rebels, and in Syria against the Islamic State. By contrast, imports of major arms by the Assad regime in Syria were very low during 2012–16, with the regime having to rely on stocks of major arms supplied before the war started in 2011. Egypt Arms imports by Egypt grew by 69 per cent between 2007–11 and 2012–16. During 2012–16 the USA and France each accounted for 40 per cent of Egyptian arms imports. However, Egypt is diversifying its supplier base and signed large arms deals with Russia in 2015, including contracts for 50 combat aircraft and 46 combat helicopters. Israel Israel’s arms imports were relatively stable during 2007–16, increasing 12 per cent between 2007– 12 and 2012–16. The USA accounted for 52 per cent of these transfers. In 2016 the USA agreed to the continuation of its large- scale military aid to Israel. An important element of this aid is the supply of 50 advanced F-35 combat aircraft, which the USA does not yet want to supply to Arab countries. The first two of these were delivered to Israel in 2016.
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Figure Eight: SIPRI Data on MENA Arms Transfers by Country (In Constant Millions of 1990 $US Dollars) Country Rank in 2008-2011 2012-2015 2016 Total World Purchases 2000-2016 2000-2016 North Africa Morocco 29 1,794 1,518 254 4,059 Algeria 9 2,626 4,284 2,882 12,522 Libya 83 84 254? 9? 377? Tunisia 82 17 91 33 394
Levant Egypt 12 3,131 5,315 1,483 11,853 Israel 15 981 1,455 607 8,049 Hamas 171 3? 0? 0? 3? PIJ 183 0? 0? 0? 0? Jordan 40 697 683 196 2,837 Syria 46 1,135 ? ? (2,267) Syrian Rebels 176 1? 1? 0? 2? Lebanon 96 118 111 31 270 Hezbollah 130 40? 0? 0? 54?
Gulf Saudi Arabia 3 3,520 8,710 2,979 17,859 UAE 5 3,131 5,315 1,278 17,383 Iran 31 327 103 374 3,395 Iraq 16 1,784 2,864 1,734 7,227 Bahrain 67 124 116 7 795 Kuwait 47 212 1,155 194 2,239 Oman 39 219 1,469 393 2,837 Qatar 44 514 965 901 2,454 Yemen 49 348 80? 4? 207?
O indicates value of less than $100 million ? = exceptional uncertainty Source: SIPRI Arms Transfer Data Base, http://armstrade.sipri.org/armstrade/html/export_values.php and http://armstrade.sipri.org/armstrade/html/export_toplist.php. Cordesman/Toukan MENA National Security Economics 22.3.17 33
Iranian Imports Versus Those of Its Arab Neighbors There is another critical area where the CRS and SIPRI agree: The Arab Gulf states have a massive lead in arms imports over Iran. The CRS data in Figure Six and Figure Seven have shown that Iran signed only $300 million worth of new arms agreements in 2008- 2011 and $600 million worth in 2012-2015. It took delivery on only $300 million worth of arms in 2008-2011, and $100 million worth in 2012-2015. Figure Nine reinforces the message in Figure Four that the Arab GCC states have the potential to achieve a massive lead over Iran if they use their national security expenditures more wisely and in tighter coordination, and particularly if they can improve their coordination with other key Arab states like Egypt and Jordan.
Figure Nine: Iran’s Slow Rate of Military Modernization Compared to the GCC States (Gulf Arms Orders and Deliveries: 2008-2015 in millions of current U.S. Dollars)
Country Arms Orders Arms Deliveries 2008-2011 2012-2015 Total 2008-2011 2012-2015 Total Saudi Arabia 52,500 41,000 93,500 13,000 17,700 30,700
Other GCC Countries Bahrain 400 500 900 400 100 500 Kuwait 2,400 4,400 6,800 1,300 1,900 3,200 Oman 1,600 3,300 4,900 500 3,500 4,000 Qatar 1,000 6,200 7,200 300 1,700 2,000 UAE 13,500 22,900 36,500 3,700 5,500 9,200 Sub-Total 21,300 28,600 49,900 4,500 12,800 17,300
Total GCC 92,700 106,900 199,700 23,700 43,200 120,700
Iraq 5,200 23,900 34,400 3,700 10,300 14,000 Iran 300 600 900 300 100 400 Yemen 800 100 900 400 200 600
Total 99,000 131,500 235,500 28,100 53,800 135,700
Source: Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=utf- 8&oe=utf-8, p. 30.
Total GCC new arms orders were over 300 times larger than Iran’s orders in 2008-2011. The GCC lead totaled over 106 million over Iran in 2012-2015, when the GCC orders were 178 times large than Iran’s orders. The GCC lead was over $197 million in 2008- 2015, and GCC orders were over 220 times larger than Iran’s. At the same time, the IISS data on the military balance show comparatively small deliveries of major new advanced arms from Iran’s military industries. Total GCC arms deliveries were over 39 times larger than Iran’s orders in 2008-2011. The GCC lead increased to over 430 times in 2012-2015, when the GCC deliveries were times large than Iran’s orders, GCC deliveries were over 300 times larger than Iran’s over the entire period from 2008-2015. The GCC lead in deliveries was over $120 million in Cordesman/Toukan MENA National Security Economics 22.3.17 34
2008-2015, and GCC orders were over 220 times larger than Iran’s. As the previous Figures and the Annexes to this study show, the value of this lead was enhanced by the fact that the GCC states had free access to the most advanced U.S. and European arms and Iran did not. Saudi Arabia dominated GCC new orders and deliveries during both periods and during 2008-2015. Virtually every other GCC state except Bahrain order more than Iran, and the UAE alone ordered and took delivery on over 10 times more arms that Iran. This again illustrates the critical role of major moderate regional Arab military powers like Egypt, Jordan, the Saudi Arabia, and it is important to note that arms transfers are rapidly rebuilding the military importance of Iraq. Figure Ten shows that SIPRI highlights the importance of similar trends. It estimates that Iran only took delivery on $327 million worth of arms in 2008-2011, and $103 million worth in 2012-2015, although Figure Eight has shown SIPRI’s estimate for 2016 reflects a sudden rise to $374 million -- evidently because of its purchase of the S300 air defense system from Russia. SIPRI notes that:xx SIPRI data shows that major arms imports by the Arab States of the Gulf and major arms imports to Iran are highly unbalanced. A perceived threat from Iran is a key justification for rising arms imports to several of these states both by the states themselves and the countries exporting to them, such as the USA, UK, France and Germany. All Arab States of the Gulf except Bahrain increased their major arms imports between 2007–11 and 2012–16. Of the states with tense relations with Iran, Qatar has increased arms imports by 245%, Saudi Arabia by 212%, Kuwait by 175%, and UAE by 63%. Bahrain decreased its arms imports by 19%. Iranian arms imports decreased by 27%. Iran is currently under a partial UN embargo for arms imports, keeping its imports low. In 2016 Iran received four air defence systems from Russia that are not covered by the embargo, which was the first major arms import by the country since 2007. The USA is the main supplier to the Arab States of the Gulf, supplying over 50% of imports by each of these states except Oman. Cordesman/Toukan MENA National Security Economics 22.3.17 35
Figure Ten: SIPRI Estimate of Imports by the Arab States of the Gulf are much higher than imports by Iran
Note Changes to major arms imports by Arab States of the Gulf and by Iran. Data and graphic: SIPRI Source: Dr. Kate Blanchfield, Pieter D. Wezeman, and Siemon T. Wezeman , “The state of major arms transfers in 8 graphics,” SIPRI, February 22, 2017, https://www.sipri.org/commentary/blog/2017/state-major-arms-transfers-8- graphics.
The U.S. Defense Security Cooperation Assistance Data Figure Five, Figure Six, and Figure Seven have already shown that the U.S. is scarcely the only supplier of advanced arms to the MENA region and Figure Eleven draws on the CRS data discussed earlier to show the percentage of arms orders and deliveries that major suppliers contributed to arms transfers to the MENA region during 2008-2015, and its clear that the role of other suppliers increase sharply during this period: Cordesman/Toukan MENA National Security Economics 22.3.17 36
Figure Eleven: Arms Transfer Agreements to the Near East by Supplier as Percent of Total Value
Note: The CRS report defines the Near East region as including: Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates, and Yemen. Source: Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=utf- 8&oe=utf-8, p. 24 Nevertheless, the U.S. is the largest supplier to the region and has the great ability to project power in support of its security partners and allies. It also has a unique capability to provide comprehensive mixes of space, airborne, electronic, and other intelligence surveillance and reconnaissance, and battle management capabilities, as well as air refueling and other aspect of strategic mobility. The size of U.S. arms transfers through 2015 is shown on a country by country basis in the three Annexes to this main report: Annex A on North Africa, Annex B on Egypt and the Levant, and Annex C on the Gulf and Yemen. These data do more than indicate the value of arms transfers. They show the importance of U.S. strategic partnerships with key nations like Morocco, Egypt, Israel, Jordan, Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The defense economics of the MENA region are scarcely dictated solely by the efforts of the region’s states and non-state actors. The U.S. plays a critical role in shaping the regional military balance and overall level of regional military effort. It is not possible to cost the impact of U.S. power projection and rapid deployment capabilities but they have a critical impact, are reinforced by the role of British and French forces, and play a critical role in any effort to strengthen the GCC and military cooperation among key Arab states like Egypt, Jordan, Saudi Arabia, and the UAE – as well as to assist smaller friendly states n preserving their security. Moreover, making these partnerships more stable and effective can play a critical role in containing the role of other outside states like Russia, Turkey, and China. THE REAL WORLD DYNAMICS OF MENA SECURITY AND STABILITY The economics of defense do help provide a full picture of the comparative efforts of given countries and the interaction between them. At the same time, the data have clear gaps and uncertainties. Moreover, the economics of national security have two critical Cordesman/Toukan MENA National Security Economics 22.3.17 37 dimensions where the data are not clear and/or receive far too little attention. These include internal security and counterterrorism, and national stability. It Isn’t How Much You Spend, It Is How Wisely You Spend and What You Buy Focusing on total military expenditures, the percent of GDP as measures of military strength and burden sharing, and on comparative level of arms imports tells little about the real world nature of any given country’s security and stability. Once again, total military spending, and spending as a percent of GDP, say nothing about the extent to which the money buys the desired level of deterrent and defense capabilities, nothing about whether it is spent wisely or effectively, and nothing about what level of spending is actually required. Arms import spending can be a rough measure of modernization, but it again does not indicate whether the money is spent wisely, on the right mission capabilities, and is matched with adequate personnel, training, and readiness. This is particularly true in the MENA region where nations have often made major buys of advanced arms more for status or their “glitter factors” that out of military necessity Turning “Burden Sharing” Into the Theater of the Absurd Policymaker’s also need to understand that much of the current emphasis on burden sharing is analytically ridiculous to the point where it approaches the theater of the absurd. Setting a given percentage of GDP for military spending can sometimes be a useful political straw man to use in persuading countries to spend more on military forces regardless of purpose or outcome. From a practical military perspective, setting such goals does nothing to ensure that the money is spent wisely or effectively and that the end result produces a desired strategic impact. This can only be determined by assessing the impact of spending on the military balance, and deterrent and warfighting capabilities, and even those measures only affect military security, not internal security or the civil aspects of internal stability. There is no way to know the level of problems that paying less creates, or to determine the real world advantages in spending more. National Stability is at Least as Critical as Military Security and Counterterrorism Even more important, focusing on military spending data and percentages of GDP makes no allowance for the differences between countries in population and economic development, competing needs for state spending, and the different costs given states face. Military spending is only one of three key metrics of national security spending in a region where spending on counterterrorism and internal security, and on the stability and security of the civil sectors is just as important. These issues are particularly critical in a region where: the political upheavals that began in 2011 showed that the ability to meet popular needs and expectations, and maintain national stability is not an exercise in idealism, but is at least as critical an element of “hard power” as having strong military forces and counterterrorism capabilities. Cordesman/Toukan MENA National Security Economics 22.3.17 38
The MENA region is remarkably diverse in many ways, but the threats to national stability have a number of forces in common: • Virtually every state has increased its population by at least five times since 1950, and a faces another increase of 50-70% by 2050. Almost all states have not been able to keep up in funding infrastructure and services, and face major problems in employing a wave of young men and women entering their labor force. • The World Bank and IMF find many – if not most – states have failed to carry out critical economic reforms, and reduce the barriers to doing business. • The World Bank ranks the level of governance as weak, authoritarianism and corruption are sometimes serious problems, and internal stability faces further challenges because of ethnic, sectarian, and tribal divisions and tensions. • The rises of violent Islamist extremist movements present at least a major threat in most countries in the region. It is a key source of conflict in Iraq, Libya, Syria, and Yemen, and presents a serious terrorist threat in many other states. • The arms race between Iran and most of its Arab neighbors has created a steadily more unstable balance of military power, and led to competition with Iran for military influence in Bahrain, Iraq, Lebanon, Kuwait, Syria, and Yemen • Six Countries have had massive internal stability programs and political upheavals since 2011: Bahrain Egypt, Libya, Syria, Tunisia and Yemen. • Four countries -- Iraq, Libya, Syria, and Yemen – are fighting major civil wars; two more states – Saudi Arabia and the UAE – are actively participating in the Yemeni civil war, and a wide range of state including Iran and the Hezbollah in Lebanon are participating in the civil war in Syria. • These conflicts have had a major economic and political impact on neighboring states, and several – Jordan, Lebanon, and turkey – face major burdens from a flood of refugees from the Syria conflict while others make significant aid contributions. • The states with large petroleum incomes have been able to fund both large military forces and play a major role in providing regional aid, but where key exporting states: Iran, Kuwait, Oman, Qatar, Saudi Arabia and the UAE have suffered a cuts of some 50% in their petroleum export revenues since 2014, and Iraq and Libya have suffered even more severe losses because of a combination of low petroleum prices and war. The forces unleashed in 2011 are still at work, and often present deep structural problems that governments must solve to survive. In simple terms, one key definition of “hard power,” and the resulting cost of national security, is anything that governments and their peoples must do to survive. Effective governance, economic growth, rising living standards and levels of employment, reduced corruption, and national equity for all citizens are as important to this end as any number of missiles and counterterrorism forces. These points are illustrated in summary form in the summary regional comparisons in Figure Twelve to Figure Fifteen. It should be stressed that these are only part of the pressures that that illustrate key threat to national stability, and that polls show the ideological dimension is often as important as factors like governance and economics. At the same time, even a brief review of these figures shows the correlation between poor performance in critical areas of national stability and the nations subject to massive political upheavals and civil war.
Cordesman/Toukan MENA National Security Economics 22.3.17 39
Figure Twelve: Mapping Sectarian and Ethnic Tensions Sectarian Divisions
http://www.nytimes.com/interactive/2016/01/04/world/middleeast/sunni-shiite-map-middle-east-iran-saudi-arabia.html?_r=0 Arab and Kurd
Source: Source: Atlas-Syria: Federal Ministry of the interior, Republic of Austria, 2015, http://www.ecoi.net/atlas_syria.pdf, p. 16 Cordesman/Toukan MENA National Security Economics 22.3.17 40
Figure Thirteen: Governance and Corruption Governance
Corruption
Source: Transparency International Corruption Perceptions Index, Accessed February, 2016 and February 2017. http://www.transparency.org/cpi2015/#results-table and http://www.transparency.org/news/feature/corruption_perceptions_index_2016
Cordesman/Toukan MENA National Security Economics 22.3.17 41
Figure Fourteen: Population Pressure and the "Youth Bulge"
Source: United States Census Bureau, International Data Base, Accessed April 2015. http://www.census.gov/population/international/data/idb/informationGateway.php . The "Youth Bulge:" Pressure on Employment and Government Spending
GDP Figures: “GDP per Capita (current US$),” The World Bank, accessed February 10, 2016. Wealth Figures: “Global Wealth Data Source: Central Intelligence Agency, World Factbook 2014, Accessed April 2014, https://www.cia.gov/library/publications/the-world- factbook Cordesman/Toukan MENA National Security Economics 22.3.17 42
Figure Fifteen: Income Per Capita and Falling Behind in Key Services GDP Per Capita (Per Capita Income)
GDP Figures: “GDP per Capita (current US$),” The World Bank, accessed February 10, 2016. Wealth Figures: “Global Wealth Data Book 2012,” Credit Suisse, October 2015, Accessed February 11, 2016, p. 19-22 The Civil Side: Education and Health: 2000-2030
Source: Paul Rivlin, “The Arab Human Disaster Report-The Arab World Five Years After: Part 2,” Middle East Economy, Vol. 7, No. 1 January 30, 2017, p. 3.
Cordesman/Toukan MENA National Security Economics 22.3.17 43
PUTTING MENA NATIONAL SECURITY SPENDING IN GRAPHIC PERSPECTIVE BY SUBREGION AND COUNTRY It is not possible to address all of these issues in depth in this study, much less set forth a country-by country analysis. It is possible, however, to present some of the key metrics that affect national stability for each country , along with the metrics on national security spending and arms transfers. This is why Annex A on North Africa, Annex B on Egypt and the Levant, and Annex C on the Gulf and Yemen re so important. The Subregional and National Annexes As noted earlier, one key aspect of national security economics is to look at the longer- term trends in spending on military forces, internal security, and internal stability. The Annexes to this study provide a series of graphs and tables for each country grouped into three subregions: North Africa, the Levant, and the Gulf. The graphs cover military spending, GDP, and military spending as a percent of GDP. They also include tables showing the levels of arms imports and military assistance from the U.S., and the critical impact on national revenues of the recent cuts in world petroleum prices. What is far more important , however, is that they provide a range of indicators showing reflecting different aspects of the interaction between military spending, national economics, internal security, and national stability. It is not possible to provide a narrative to cover each of these indicators by country, or to discuss their complex interactions, but virtually every policymaker and analyst that glances through this material will immediately be able see that the differences in factors like per capita income, the levels of economic growth, levels of unemployment, budget surplus or deficit, radical sudden declines in petroleum export revenues, sharp differences in the role of the state in the economy and the other metrics in each Annex show reveal key issues and uncertainties in both achieving national security and national stability. Examining National Stability in Depth These issues are also explored in depth by region and country two other studies by the Burke Chair at CSIS: • Stability in the MENA Region: Beyond ISIS and War, Volume One: Regional Trends, a comparative survey of the key quantitative civil factors and trends shaping stability and instability in the region. This volume is available on the CSIS website at http://csis- prod.s3.amazonaws.com/s3fs-public/160419_MENA_Stability_II_Country_01.pdf. This volume begins by illustrating the sheer complexity of the forces now shaping the MENA region, and the difficulty of finding any overall model that fits the different variables involved. It explains the broad outline of the risk assessments used in the study—which compare a wide range of quantifiable longer terms trends drawn from a range international sources—with the full knowledge that many factors cannot be reliably quantified or ranked, and there are often serious uncertainties in the data. The report then surveys various estimates of: o Governance, Security, Regulation, Rule of Law, Corruption, and Effectiveness o Corruption Cordesman/Toukan MENA National Security Economics 22.3.17 44
o Authoritarianism, Repression, and Failed Governance: Popular Fears and Concerns o Popular Perceptions of the State o War and the Cumulative Human Impact of the “Arab Winter” o Demographics, and Hyperurbanization o The Size and Impact of “Youth Bulges o Societal Change and Human Development o How Religion and Ideology Interact with Sect and Ethnicity o Budget Trends and Stability o Economics, GDP Per Capita and Wealth Distribution o Finance and Banking o Ease of Doing Business Indicators o The “Energy Curse” and the End of the “Petroleum Bubble”? o Food Cost and Security o Trade, Balance of Payments, Tourism o Water, Climate Change, and Drought o Environment • Stability in the MENA Region: Beyond ISIS and War, Volume Two: Country-by-Country Trends, a country-by-country risk assessment and survey of the key quantitative civil factors and trends shaping stability and instability in the region. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs-public/160419_MENA_Stability_I_Regional_0.pdf. It contains a country-by-country summary risks assessment, and then provides country-by-country selective comparisons by country and sub-region, and comparisons of the trends in governance, corruption, violence, and rule of law. It also includes country-by-country analyses of human development indicators, demographics and unemployment, trends in GDP per capita, global competitiveness, ease of doing business, current account and balance of payments, and global information technology. • Stability in the MENA Region: Beyond ISIS and War, Volume Two: Country-by-Country Trends in North Africa, a regional risk assessment and survey of the key quantitative civil factors and trends shaping stability and instability in North Africa. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs- public/160419_MENA_Stability_II_North_Africa.pdf. • Stability in the MENA Region: Beyond ISIS and War, Volume Two: Country-by-Country Trends in the Levant, a regional risk assessment and survey of the key quantitative civil factors and trends shaping stability and instability in the Levant. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs- public/160419_MENA_Stability_II_Levant.pdf. • Stability in the MENA Region: Beyond ISIS and War, Volume Two: Country-by-Country Trends in the Gulf States, a regional risk assessment and survey of the key quantitative civil factors and trends shaping stability and instability in the Gulf States. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs- public/164019_MENA_Stability_II_Gulf.pdf. • Stability in the MENA Region: Beyond ISIS and War, Annex: The SIRA Strategic and International Risk Assessment Model, a technical explanation of the new risks assessment and data analysis model developed by Dr. Abdullah Toukan and used throughout the analysis. This Cordesman/Toukan MENA National Security Economics 22.3.17 45
volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs- public/160419_MENA_Stability_Model_Annex_0.pdf. These volumes, and the Annex presenting the risk model, look beyond the immediate political and security issues that shape the Middle East and North Africa (MENA) region and look at broader range of forces that are shaping both its instability and violence in the region.
Cordesman/Toukan MENA National Security Economics 22.3.17 46
1 See UNDP, Arab Human Development Reports (AHDR), 2002-2016, http://www.arab-hdr.org/, and http://www.arab-hdr.org/reports/regionalarab.aspx, and http://www.un- arm.org/MilEx/CountryProfile.aspx?CountryId=207. 2 See United Nations Office for Disarmament Affairs (UNDOA), United Nations Report on Military Expenditures, http://www.un-arm.org/MilEx/ReportingOnline.aspx. 3 http://www.un-arm.org/MilEx/ReportingStatistics.aspx. 4 Military spending and economic data are available for current spending for two to three years in the annual editions of the IISS Military Balance. see http://www.iiss.org/en/publications/military-s-balance. 5 The database can be publically accessed at https://www.sipri.org/databases/milex. 6 See CIA, https://www.cia.gov/library/publications/the-world-factbook/, and https://www.cia.gov/library/publications/the-world-factbook/rankorder/2034rank.html#sa, and 7 IISS, Military Balance, 2017, p. 556 8 IISS, Military Balance, 2017, p. 556 9 See “comparative defense statistics), Chapter Two, IISS, Military Balance, 2017, 10 Two series of world and Middle East totals are presented. The first, in each case, provides a time consistent series from 1988–2015, while the second provides a higher set of figures from 2004–2015(2004– 2014 for the Middle East), which are those provided in the SIPRI data release in April 2016, and published in the SIPRI Yearbook 2016. The longer world and Middle East series have lower figures for 2004–2014/15 than in the SIPRI data release and Yearbook, because they exclude data for Iraq, as there is insufficient military spending and/or economic data to make meaningful estimates for Iraq for the whole period 1988–2015. In particular, SIPRI's normal approach to estimating missing data for regional totals would not be viable given the extreme changes in Iraq resulting from the Iran-Iraq war, ending in 1998, the Gulf War in 1990–91, and the sanctions regime in the 1990s. However, from 2004–2015, data for Iraq is available, so the shorter series in the SIPRI data release includes this data. All world and regional estimates also exclude certain countries due either to data being missing for too many years to make meaningful estimates, or to an absence of economic data to enable conversion to constant (2014) US$. These countries are Cuba, Eritrea, North Korea, Sudan, Syria, Turkmenistan, Uzbekistan and the former Yugoslavia 11 See “comparative defense statistics), Chapter Two, IISS, Military Balance, 2017,
12 See Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=ut f-8&oe=utf-8. 13 Military spending and economic data are available for current spending for two to three years in the annual editions of the IISS Military Balance. see http://www.iiss.org/en/publications/military-s-balance. 14 Defense Security Cooperation Agency (DSCA), Fiscal Year Series, September 30, 2015, http://www.dsca.mil/resources/dsca-historical-facts-book-fiscal-year-series. 15 See SIPRI, http://armstrade.sipri.org/armstrade/html/export_values.php . SIPRI states that its Arms Transfers Database contains information on all transfers of major conventional weapons from 1950 to the most recent full calendar year. It is a unique resource for researchers, policy-makers and analysts, the media and civil society interested in monitoring and measuring the international flow of major conventional arms. SIPRI also states that its Arms Transfers Database can be used to generate detailed written reports (trade registers) and statistical data (trend indicator values, TIV) and to address a range of questions, including: • Who are the suppliers and recipients of major conventional weapons? • What weapons have been exported or imported by specific suppliers or recipients? Cordesman/Toukan MENA National Security Economics 22.3.17 47
• How have the relationships between different suppliers and recipients changed over time? • Where do countries in conflict get their weapons from? • How do states implement their export control regulations? • Where are potentially destabilizing build ups of weapons occurring? • What is the relationship between access to natural resources and arms transfers?
The UNDOA arms transfer data are available at https://www.un.org/disarmament/convarms/register. They show major transfers by seller and broad categories of weapons and weapons numbers to individual recipients, but do have important gaps in coverage of weapons types and all areas of military equipment transfers, and in providing full coverage of given periods of time. 16 Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=ut f-8&oe=utf-8, pp. 12-13, 15-16. xvii Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=ut f-8&oe=utf-8, p. 31. xviii Catherine A. Theohary, Conventional Arms Transfers to Developing Nations, 2008-2015, Congressional Research Service, December 19, 2016, https://www.google.com/search?q=Congressional+Research+Service%2C+data+on+arms+transfers&ie=ut f-8&oe=utf-8, p. 42 xix Anne Fleurant, Pieter D. Wezeman, Siemon T. Wezeman and Nan Tian, “Trends in International arms Transfers, 2016, transfers in 8 graphics,” SIPRI, February 22, 2017, https://www.sipri.org/commentary/blog/2017/state-major-arms-transfers-8-graphics xx Dr. Kate Blanchfield, Pieter D. Wezeman, and Siemon T. Wezeman, The state of major arms transfers in 8 graphics, SIPRI, February 22, 2017, https://www.sipri.org/commentary/blog/2017/state-major-arms-transfers-8- graphics